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A a, 
The Foreign Relations ~, 7 
oF cama ke 


A History and a Survey 


BY 


Mingchien Joshua Bau, M.A., Ph.D. 


Graduate Tsing Hua College, Yale, Columbia and Johns Hopkins 
Universities. Sometime Holder Carnegie Endowment 
International Law Fellowship, etc. 


New Yor«k CHICAGO 


Fleming H. Revell Company 


LONDON AND EDINBURGH 


Copyright, 1921, by 
FLEMING H. REVELL COMPANY 


Printed in the United States of America 


New York: 158 Fifth Avenue 
Chicago: 17 North Wabash Ave. 
London: 21 Paternoster Square 
Edinburgh: 75 Princes Street 


DEDICATED 
TO 


MY SUFFERING PEOPLE IN CHINA 


MALins 

‘ee ix 
Pe PASM Bi ’ 
: PO Ont 


We 


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32 a 


BUEN 5 
Vi Dey a 
rea 

4 


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PREFACE 


THE purpose of this work is to study the foreign re- 
lations of China, and to work out for her a foreign 
policy. To achieve this object, the author was com- 
pelled to study the foreign relations of China as a whole, 
rather than to confine himself to any particular phase of 
the subject. Conscious of the danger of its extending over 
too wide a field, he has limited the scope of his work 
to the salient features only, omitting the minor and un- 
important ones. Aware also of the possible risk of sac- 
rificing quality to quantity in undertaking a task of these 
dimensions, he has, so far as time and sources of in- 
formation permitted, brought each chapter to the requi- 
site standard. 

In undertaking this work the author was confronted 
at every turn by the difficulty due to the absence of 
any regular official publication of the Chinese Ministry 
of Foreign Affairs. While there are a few separate 
pamphlets that have been issued, there is no series of 
publications comparable with the Foreign Relations of 
the United States or the State Papers of Great Britain. 
Hence the author was obliged to resort to the archives 
of the Foreign Offices of other nations to find the neces- 
sary material. As far as feasible, he has endeavored to 
use first-hand sources, such as treaties, diplomatic docu- 
ments, substantiated facts of history, etc., and has used 

vil 


Viil PREFACE 


secondary sources, only in so far as they helped him 
reach the originals and understand the same. 

Conscious of the danger of expressing ill-considered 
opinions or of reaching injudicious conclusions relating 
to so grave a subject as the foreign relations of China, 
the author has entered into the work with an open mind, 
and has aimed only to reach the truth. Particularly 
with respect to Japan, with which country China has 
lately had such serious differences, he has attempted to 
study its policy and problems from the point of view of 
Japan, striving to arrive at the real difficulties and causes 
behind the actions of that Empire. It is his conviction 
that, as the interests and destinies of the two countries 
are so interwoven, China cannot solve her own problems 
without at the same time solving those of Japan; nor 
can Japan solve hers without at the same time solving 
those of China. To this end, he has striven to obtain a 
solution for both countries at the same time. 

The author has undertaken his work with a sense of 
duty to his country and to humanity. Probably there is 
no question in the history of China which deserves the 
attention of her citizens more than her foreign relations 
and the formulation of a proper and fitting foreign 
policy to meet the situation. Ever since the opening of 
the country, the history of China has been dominated by 
foreign contacts. Hence a proper understanding of the 
foreign relations of China and a formulation of an ap- 
propriate foreign policy are indispensable to her pres- 
ervation and well-being. Going a step further, China’s 
destiny and welfare are intimately associated with the 
destiny and welfare, not only of the neighboring states 


PREFACE ix 


of the Far East, but also of the entire world. Carrying, as 
her citizens feel, the mission of promoting world peace, 
China’s foreign relations and policy will probably be the 
keynote, or at least an essential factor, in world peace. 
In doing this work, therefore, the author feels that he 
is discharging a duty to his nation, and an obligation 
to mankind. 

The book is divided into six parts, and thirty-two 
chapters. As an understanding of the diplomatic history 
of China is necessary to the study of the whole subject, 
Part I covers the diplomatic history of China, divided 
into four periods, the opening of China (1689-1860), the 
loss of dependencies (1860-1895), the international 
struggle for concessions (1895-1911), and international 
cooperation and control (1911- ), each constituting 
a chapter. Part II treats of the policies of the Great 
Powers in China,—Russia, France, Germany, Great 
Britain and the United States. As Japan occupies such 
an important and dominant position in the foreign re- 
lations of China, Part III is devoted exclusively to the 
policy of Japan in China. It being necessary to observe 
the impairments of China’s sovereignty, so as to lead to 


suggestions as to the policy of recovery, Part IV relates 
to the various forms of impairment, such as extraterri- 
toriality and consular jurisdiction, concessions and settle- 
ments, leased territories, spheres of influence or interest, 
the most favored nation clause as applied in China, and 
tariff autonomy. Part V deals with questions arising 
since the war,—the New International Banking Con- 
sortium, the League of Nations and China, and the 
Shantung Question,—pointing out the significance in, and 


x PREFACE 


the effect upon, the international relations of China, 
and, in the case of the Shantung Question, offering a 
solution for the problem. Part VI formulates a foreign 
policy for China, including the policy of preservation, 
the policy of recovery, the policy of the Golden Rule 
and the policy of world welfare, ending with a special 
policy toward Japan. 

The author wishes to acknowledge his deep indebted- 
ness to all the authors whose works he has consulted, 
many of which appear in the references or footnotes, to 
the Department of State for valuable assistance in ob- 
taining some necessary documents, to J. P. Morgan & 
Company, New York, for the information regarding the 
New International Banking Consortium, to his revered 
teacher, Professor W. W. Willoughby, Johns Hopkins 
University, under whose supervision and guidance this 
work was done, and to Professor Harlan P. Beach, Yale 
University, for kindly criticisms and suggestions. 


MINGCHIEN JosHUA Bau. 


Johns Hopkins University, 
Baltimore, Maryland. 


CONTENTS 


PART TI 


A SKETCH OF THE DipLomMaTic History OF CHINA 


I. THE OPENING OF CHINA (1689-1860) . 
II. THe Loss or DEPENDENCIES (1860-1895) 
III. Tue INTERNATIONAL STRUGGLE FOR Con- 
CESSIONS (1895-1911) 
IV. INTERNATIONAL COOPERATION AND Con- 
TROL (1911- ) 


PART II 


POLICIES OF THE GREAT POWERS IN CHINA 


V. Tue Poricy or Russta 
VI. Tue Poricy oF FRANCE . 
VII. Tue Poticy oF GERMANY 
VIII. Tue Poticy or Great BRITAIN 
IX. Tue Porticy oF THE UNITED STATES 


PART) Ht 
Tue Poticy oF JAPAN IN CHINA 


X. THe DEVELOPMENT OF JAPAN’s PoLicy 
IN CHINA 
AL. POLICYIaF Economic EXPLOITATION 
XII. Poricy or TERRITORIAL EXPANSION 
XIII. Poricy or PARAMOUNT INFLUENCE 
XIV. Powicy or PoLiticAL CoNTROL 
XV. Tue “Astatic” Monroe Doctrine 
XVI. Tue “TweEenty-oNE DEMANDS” AS AN 
EXPONENT OF JAPAN’S POLICIES IN 
CHINA 
XVII. Tue Wispom oF JAPAN’S Pottcy IN 
CHINA 


AGH 
f 
18 


37 
62 


93 
110 
120 
oe 
149 


181 
192 
207 
216 
230 
243 


254 
263 


X1i 


XIX. 
XX. 
XXI. 
XXII. 


XXIII. 


CONTENTS 


PARTLY 


IMPAIRMENTS OF CHINA’S SOVEREIGNTY 
XVIII. 


EXTRATERRITORIALITY AND CONSULAR 
JURISDICTION . 

CONCESSIONS AND SETTLEMENTS 

LEASED TERRITORIES : 

SPHERES OF INFLUENCE OR INTEREST ’ 

Tue Most Favorep NATION TREAT- 
MENT i 

TARIFF AUTONOMY ; 


PART V 


New ProspLtEMsS ARISING SINCE THE WAR 


DCL, 
XXV, 


Tia IT. 
ov l! 


XXVITI. 
XXIX. 
XXX. 
XXXII. 
XXXII. 


THe New INTERNATIONAL BANKING 
CONSORTIUM . ‘ 

THe NEw Livrae aaa uarennte 
Consortium (Continued) ae 

THe LEAGUE oF NATIONS AND CHINA 

THE SHANTUNG QUESTION 


PAR EOVEL 
A ForeIGN Poticy FoR CHINA 


Poticy OF PRESERVATION 

PoLticy OF RECOVERY 

PoLicy OF THE GOLDEN RULE 

Poticy oF Woritp WELFARE . 

A Portcy Toward JAPAN IN Par- 
TICULAR. . ? : 


PAGE 


285 
309 
324 
337 


351 
371 


389 


405 
416 
427 


475 
485 
493 
500 


505 


RAK EL 


em ok ETCH OF THE DIPLOMATIC‘(HISTORY: OF 
CHINA 
I. THE OPENING OF CHINA 
Il. Tue Loss or DEPENDENCIES 
Ill. THe INTERNATIONAL STRUGGLE FOR CONCESSIONS 


IV. INTERNATIONAL COOPERATION AND CONTROL 


I 
THE OPENING OF CHINA (1689-1860) 


THE diplomatic history of China can be divided into 
four periods. The first period covers the years from 
1689, when China made the first treaty with a Western 
Power, to 1860 when she first consented to enter into 
formal diplomatic relations with the Powers at Peking. 
This period is characterized by the gradual opening of 
China to the trade and intercourse of the Western world, 
and so it may rightly be called the period of the opening 
of China. 

Prior to the opening, China was more or less an iso- 
lated nation. She had had little to do with Western 
countries. Although there were some travelers like 
Marco Polo who had come to China long before she was 
opened, she had had little intercourse with the Occident. 
This isolation was not a result of the deliberate choice of 
the Chinese. It was rather an inevitable consequence of 
the. geographical setting. On the North she is bounded 
by the Mongolian deserts. As if these natural barriers 
were not enough, she built the Great Wall extending over 
the entire length of her Northern boundary, thus effec- 
tively shutting out the aliens from the North. On the 
West she was buttressed by the Himalaya Mountains, 
which offered such an effective obstruction that few peo- 
ple were likely to cross them. On the South and East 
she was limited by seas and oceans which separated her 
effectively from the rest of the world. 

As a result of this geographical isolation she developed 
a type of civilization that was unique and quite differ- 
ent from the main branches of European civilization. 
She also became the mother of Oriental civilization and ex- 

3 


4 THE DIPLOMATIC HISTORY OF CHINA 


tended her influence as far as the geographical setting 
would allow her. Toward the North she extended her 
civilization to the Mongols and the Manchus. Toward the 
West she carried her civilization to Chinese Turkestan, 
Sinkiang and Tibet. Toward the South she sowed the 
seeds of culture in Burma, Annam and Siam. On the 
East she extended her civilization to Korea and Japan. 

This superiority, however, achieved in geographical 
isolation, soon resulted in self-complacency and pride. 
Supreme in the Far East, she had no rivals. As a re- 
sult, she became self-satisfied and unprogressive. She 
remained so until Western contact woke her from her 
lethargy. Thus we can clearly understand why, when 
the West came knocking at the door, she was proud and 
regarded all Westerners as barbarians and subjects of 
vassal states. We can also understand why she refused 
to have her tranquillity and isolation disturbed by the 
intrusions of the West. 

The Portuguese were the first to arrive. They landed 
in 1517 at St. John’s Island in South China, and later 
in 1557, they occupied the present city of Macao, which 
became the chief trading port of South China—before 
the rise of Hongkong. Next to the Portuguese came their 
rivals, the Spaniards, who crossed over from Manila in 
1575. Then came the Dutch in 1622 who occupied the 
Island of Formosa until 1661, when they were driven 
out by the conquering Koxinga. In 1655 they sent an em- 
bassy to Peking, asking for privileges of trade. They 
performed all the rites required of them—kneeling and 
prostration (kowtow)—and also offered tribute as from 
a vassal state. In spite of their efforts, however, they 
only obtained the privilege of coming to trade once in 
eight years and each time not exceeding a hundred men. 
About the same time, in 1653, Russia also came over by 
land and asked for commercial privileges, but as the 
embassy refused to kowtow, the mission was not granted 
an audience. 


THE OPENING OF CHINA 5 


The first treaty of China was commonly called the 
Treaty of Nerchinsk, August 27, 1689. It was made in 
consequence of the Russian construction of some forts at 
Albazin and Karmarskai-Astrog which the Chinese 
thought was an invasion of their territory and for which 
reason they attacked the forts and demolished the one 
at Albazin. Thereupon, a border war ensued, with alter- 
nating triumphs for both sides. This treaty signed at 
Nerchinsk ended the war. The rivers Rerbetchi and 
Ergoné were made boundaries. ‘The fortress built at 
Albazin was to be demolished. Extradition and extra- 
territoriality of a primitive character were provided. The 
right to travel with passports and to trade was recipro- 
cally given. 

Subsequently, further treaties were made with Rus- 
sia. On October 21, 1727, the treaty of Kiakhta was 
concluded. The boundary at and near Kiakhta was de- 
fined. Frontier trade was regulated and jurisdictional 
differences were settled. A Russian embassy was per- 
mitted to reside in Peking, and four youths and two 
adults were permitted to study the Chinese language and 
four priests to practice their cult. This treaty of Kiakhta 
was amended in 1768, regulating more specifically fron- 
tier extradition and criminal jurisdiction. In 1792 a 
further convention was signed by the Governor of Ir- 
kutsk and the Chinese frontier officers, regulating com- 
merce at the border. 

These treaties with Russia did not open China up in 
any way, either for foreign trade or diplomatic inter- 
course. What the Russians obtained through these trea- 
ties was trade privileges at the frontier and the right of 
residence for the Russian Embassy at Peking. Hence, 
in 1806, when the Russian ships arrived at Canton for 
trade, the Imperial order decreed that Russia, having the 
privilege of trading at the land frontier, was not allowed 
to trade by sea, and, therefore, excluded from coastal 
trade of China. Later, Admiral Count Putiation was 


6 THE DIPLOMATIC HISTORY OF CHINA 


commissioned as Russian Envoy and came to Peiho and 
asked for the privilege of maritime trade and upon being 
refused there, he went down to Hongkong in 1857 and 
joined the Allied diplomats of England and France and 
sought for maritime trade privileges under the egis of 
the Allied forces, then in operation against China dur- 
ing the second war between Great Britain and China. 


So far none of the European States was able to effect 
the opening of China. The task finally fell on the 
shoulders of Great Britain. Not without initial rebuffs 
and adverses, however, did Great Britain perform the 
task. In 1793 Lord Macartney came to Taku, and thence 
he was convoyed to Peking in boats and carts bearing 
the inscription ‘““Ambassador bearing tribute from the 
country of England.” + His mission resulted in failure. 
Again in 1816 Lord Amherst went to Peking, but as he 
refused to kowtow, and to be hurried to an Imperial 
audience early in the morning immediately upon his 
arrival, he had to depart in disappointment. 

Rebuffed but not discouraged, Great Britain persisted 
in her task. In 1834, she abolished the monopoly en- 
joyed by the East India Company and instituted free 
trade in Canton; and, to supervise British trade, three 
superintendents were appointed, of which Lord Napier 
was chief. The latter came to China with the su- 
preme resolve to open up China and to assert national. 
equality. He came to Canton from Macao without per- 
mit from the Chinese local authorities, which was re- 
quired at that time; and besides, he intended to deliver 
a letter and not a petition to the Viceroy. His action 
so incensed the Viceroy that he was refused a conference 
until he had retired to Macao and come up in accordance 
with the established rule, which Lord Napier refused 
to do. A deadlock between the Viceroy and Lord Napier 
ensued, resulting in the stoppage of British trade. Mean- 
while, malarial fever overtook Lord Napier, which com- 


THE OPENING OF CHINA 7 


pelled him to retire to Macao, where he died on October 
11, 1834. 

After the death of Lord Napier, the superintendents 
who succeeded him adopted a quiescent policy, comply- 
ing generally with the regulations of the Canton authori- 
ties. But in 1836 Captain Eliot was appointed chief 
superintendent, and with his advent, events took a sharp 
turn, leading to the first war between China and Great 
Britain (1840-1842). 


In 1838 Lin Tse-Hsi was appointed Imperial High 
Commissioner at Canton. He came with the Imperial 
Commission to exterminate the opium traffic which for- 
eign traders, mainly the British, had been illegally carry- 
ing on with the connivance of corrupt Chinese officials. 
His policy was first to destroy all the opium in the pos- 
session of foreign traders, and then to safeguard the 
future by requiring them to deposit bonds as a pledge 
that they would not deal in opium thereafter. He 
therefore demanded the surrender of all the opium in 
possession of the foreign communities.2 Upon refusal 
of the foreign communities to deliver up the opium, he 
declared martial law and put the British factory and 
community under military quarantine. He made the 
blockade so effective that, in a few days, deprived of 
food and other supplies, the foreign community was 
on the verge of starvation. Consequently, Eliot yielded 
on March 27, 1839, and surrendered the stock of opium 
amounting to 20,291 chests,? whereupon the blockade 
was lifted. 

Immediately thereafter, Captain Eliot ordered his coun- 
trymen to prepare to leave in a body; and-also an- 
nounced that he would ask the Queen to exact due 
indemnity for the opium so arbitrarily seized. On May 
24, 1839, the whole British community moved from Can- 
ton to Macao, where Captain Eliot waited for instruc- 
tions from home. 


8 THE DIPLOMATIC HISTORY OF CHINA 


Meanwhile, another event transpired which made 
war inevitable. A party of British sailors, while on the 
Kowloon side of the Hongkong anchorage, murdered a 
Chinese named Lin Wei-li during the course of a riotous 
search for intoxicating liquor. Commissioner Lin de- 
manded an immediate redress by the surrender of the 
British murderer. Having obtained no satisfaction, to 
enforce his demands, he moved his forces to Heungshan, 
and issued two orders on August 15, 1839, one cutting 
off the supplies of the British in Macao and the other 
ordering all Chinese servants to leave their British mas- 
ters, whereupon the British moved from Macao to Hong- 
kong. On October 25 he issued a peremptory order for 
the surrender of the murderer, and three days later 
threatened to blockade Hongkong and to effect the arrest 
of the murderer himself. On November 3, 1839, the 
first naval battle was fought in Chuenpi, which marked 
the beginning of the first war between China and Great 
Britain. 

The issues of the war were quite clear. On the part 
of the Chinese, opium was the great issue. To extermi- 
nate the opium evil was the supreme aim of the war. 
The jurisdiction over criminals of the homicide class 
was a subsidiary issue. On the part of the British, how- 
ever, reparation for the loss of opium, the granting of 
better trade privileges and the recognition of national 
equality were the primary causes, while opium was a 
mere incident. 

The British won the war. As a result, the treaty of 
Nanking * was signed on August 29, 1842. Five treaty 
ports were opened,—Canton, Amoy, Foochow, Ningpo 
and Shanghai. Hongkong was ceded in perpetuity to 
Great Britain. An indemnity of twenty-one million dol- 
lars was paid. Equal status in diplomatic correspondence 
was to be observed. Tariff was to be uniform and fair. 
A supplementary treaty of October 8, 1843, was subse- 
quently signed, providing for a conventional tariff of 


THE OPENING OF CHINA 9 


five per cent ad valorem and extra-territoriality.° Follow- 
ing the British, the Americans signed the Treaty of 
Commerce on July 3, 1844, and the French, on October 
24, 1844. Belgium secured trade privileges by an Im- 
perial rescript of July 25, 1845; Sweden and Norway 
signed, on March 20, 1847, a Treaty of Commerce, vir- 
tually the same as the American Treaty of 1844. 

The first war with Great Britain accomplished only a 
part of what the British had set out to do. It opened up 
five ports of South China to the trade of the world. It 
provided for a semblance of national equality in diplo- 
matic dealings. But still it failed to open up the whole 
of China, especially the Yangtze Valley, which was the 
goal of British merchants. It further failed to provide 
for diplomatic dealings direct with the Peking court. 
All these were left to be accomplished by the second 
war between Great Britain and China (1858-1860). 


As the first war was not decisive, the Chinese were 
not convinced that they were inferior to the Westerners, 
nor were they willing to welcome Western intercourse 
thus imposed on them. They still cherished hopes of 
keeping Occidentals at a distance and indulged in thoughts 
of Oriental superiority. Thus when the opening of Can- 
ton was due, the Cantonese resisted, and, as a result, 
a violent riot took place. The entry into Canton was there- 
fore postponed,® but it was not waived. In the next 
year it was definitely postponed to 1849.7 But when 
the time came for opening, the Cantonese still obsti- 
nately refused to comply with the agreement. 

During this interval, the Cantonese became more and 
more hostile. They felt they were grossly wronged by 
the British who forced the opium traffic on them. They 
resented deeply the intrusion and compulsory intercourse 
of the unwelcome Western barbarian. They entertained 
the hope that, as soon as a chance should offer itself, 
they would expel all Western disturbers of their peace. 


? 


10 THE DIPLOMATIC HISTORY OF CHINA 


The prevailing sentiment of that time can be well dis- 
cerned in the following extract of a placard, the like of 
which was quite common during these years of irrita- 
tion and excitement.® 


“If the barbarians make a single move, then sound 
the tocsin, in every place, and, united in mind and 
strength, at one beat of the drum we will take them, 
and absolutely kill every one of the barbarian rebels, and 
not leave a blade of grass an inch high, nor allow the 
creepers to spread.” 


On the other hand, the British, on account of their 
victory, became quite arrogant and insolent. They cast 
aside their former respect for the wonders of Chinese 
civilization and openly asserted that they would, and 
could, thereafter dictate their demands to the Chinese. 
In a letter to his plenipotentiary instructing the latter 
to protest against the growing hostile feeling of the Can- 
tonese, Lord Palmerston used the following language: ® *° 


“Now they appear to be encouraging and exciting 
among the people of Canton hostile feelings towards 
British subjects; but let them not deceive themselves. 
The forbearance which the British Government has 
hitherto displayed arises, not from a sense of weakness, 
but from the consciousness of superior strength. The 
British Government well knows that, if occasion required 
it, a British military force would be able to destroy the 
town of Canton, not leaving one single house standing, 
and could thus inflict the most signal chastisement upon 
the people of that city.” 


Chafing under the dissatisfaction of the existing ar- 
rangements, a movement was put on foot to effect a re- 
vision of treaties. In accordance with the American and 
French Treaties, the revision was to take place at the 
end of twelve years, that is, in 1856. While the Treaty 
with Britain did not provide for revision, the operation of 


THE OPENING OF CHINA 11 


the most favored nation clause *? would nevertheless give 
the British the same right. They first attempted to 
induce Commissioner Yeh of Canton to enter into a 
treaty revision, but the latter declined. They then went 
North, first to Nanking and from thence to Peiho, but 
at each turn they were told that no material or radical 
modifications could be made and that the only channel of 
diplomatic intercourse and hence of treaty revision was 
Commissioner Yeh of Canton. 

Baffled by this opposition, they became convinced that 
the only way to bring about a treaty revision was to use 
force, or, in other words, to make another war. Events 
soon developed that excuses were found. On February 
29, 1856, Auguste Chapdelaine was executed by the local 
Chinese authority of Kwangsi after a judicial trial. He 
was convicted of the crime of coming out of the five 
treaty ports where the foreigners were supposed to be 
confined, and also of stirring up rebellions in Kwangsi 
against the government. The French envoy protested. 
He pointed out that in accordance with the treaty pro- 
vision regarding extra-territoriality, Frenchmen should be 
punished only by French authorities.'® 

As no satisfaction could be obtained, France was ready 
to declare war. Availing herself of the codperation with 
Great Britain in the Crimean War (1854-1856) which had 
just drawn to its close at that time, she proposed to 
Great Britain that the two Allies should continue their 
cooperation and make war in common on China, to which 
the British readily assented. The primary motive of the 
French was to protect Catholic missionaries in China; 
that of Great Britain, to obtain treaty revision. 

Shortly after another incident occurred, which gave 
the British an added impetus to enter upon the second 
war. On October 8, 1856, the lorcha Arrow was 
boarded by Chinese soldiers, and twelve of the Chinese 
crew were taken away. The Arrow was one of those 
boats owned by the Chinese but flying a British flag 


12 THE DIPLOMATIC HISTORY OF CHINA 


under registration at Hongkong, engaged generally in the 
coasting trade but not infrequently in smuggling. The 
British at once protested. They claimed that the Ar- 
row, flying a British flag, was British territory and that 
arrests could be made thereon only with the consent of 
the British. The Chinese on the other hand, contended 
that the lorcha was a Chinese boat and that they were only 
seeking a notorious robber among the Chinese crew. It 
was later discovered that the lorcha’s license under British 
protection had, according to the law of Hongkong, ex- 
pired eleven days before the incident, which meant, of 
course, that the lorcha was no more under the British 
protection.1* To this the British made the rebuttal that 
it was impossible for the lorcha to reach Hongkong in 
time for the renewal of the annual license when engaged 
in coasting trade. 

The war would have commenced earlier, had not the 
Indian Mutiny intervened on May 13, 1857, which neces- 
sitated the temporary diversion of the British land forces. 
Naval warfare, however, began in the summer of 1857. 
Thus arose the second war between China and Great 
Britain, and this time France was an added factor in 
the contest.*® 

The Allies won the war. As a consequence, Great 
Britain concluded the treaty of Tientsin, June 26, 1858, 
France, on June 27, Russia, on June 13, and the United 
States, on June 18. These four treaties were, in general, 
approximately the same, and, because of the most favored 
nation clause, the privileges conceded to one were ex- 
tended to all the others. We shall, therefore, take the 
British Treaty as the model which has determined diplo- 
matic relations of China with the Western world ever 
since. The treaty of Nanking of August 29, 1842, was 
confirmed (Article 1).1° The trade regulations of July, 
1843, were abrogated and likewise the supplementary 
treaty of October, 1843 (Article 1). “His Majesty the 
Emperor of China hereby agrees, that the Ambassador, 


THE OPENING OF CHINA 13 


Minister, or other diplomatic agents so appointed by her 
Majesty the Queen of Great Britain may reside with 
his family and establishment, permanently at the Capital, 
or may visit it occasionally at the option of the British 
Government” (Article 3). Rights of diplomatic immuni- 
ties as established in international usages were accorded 
to the British (Article 4) and the Chinese representative 
reciprocally. Religious tolerance was provided. “Brit- 
ish merchant ships shall have authority to trade upon 
the great river (Yangtze). Chinkiang was to be opened 
at once to foreign trade; Hankow and Kiukiang were 
later selected as the other trade ports (Article 10) ; New- 
chang, Chefoo, Taiwan, Swatow and Kiungchow were 
to be opened to foreign trade (Article 11). ‘All ques- 
tions in regard to rights, whether of property or per- 
son, arising between British subjects, shall be subject to 
the jurisdiction of the British authorities” (Article 15). 
Tariff revision might be demanded at the end of ten years 
(Article 27). Transit duties were fixed at the rate of two 
and one-half per cent ad valorem—half of the tariff rate. 
Most favored nation treatment of the most comprehensive 
kind was accorded: “The British Government and the sub- 
jects are hereby confirmed in all privileges, immunities, 
and advantages conferred on them by previous treaties ; 
and it is hereby expressly stipulated that the British Gov- 
ernment and its subjects will be allowed free and equal 
participation in all privileges, immunities, and advantages 
that may have been or may be hereafter granted by his 
Majesty the Emperor of China to the government or 
subjects of any other nation” (Article 54). A supple- 
mentary agreement was signed at Shanghai on November 
8, 1858, regulating trade and fixing the tariff at five per- 
cent, ad valorem with a free list. 

The ratification of the British, French and Russian 
Treaties was to be effected at Peking within one year 
from the date of signature. Only the American Treaty 
did not so provide. The French and the British accord- 


14 THE DIPLOMATIC HISTORY OF CHINA 


ingly went up North to secure ratification, but upon 
arrival at Taku, the Allies found that the forts were re- 
constructed and the river was blockaded by heavy chains. 
In an attempt to force their way through, they were dis- 
astrously repulsed by the fire of the Taku forts. Reén- 
forced, they came up again and this time silenced the 
forts, and pushed up the river until they reached Chang- 
chiawan, whereupon the Peking Court sued for peace. 

The provisions that were most obnoxious to the Im- 
perial Court were the residence in Peking of the diplo- 
matic representatives, the opening of the Yangtze to for- 
eign trade and the right of purchase of goods in the in- 
terior. These distasteful provisions led to the renewal 
of resistance on the part of the Imperial Court. 

Compromise might have been reached and peace con- 
cluded, had not another unfortunate event occurred which 
impelled the Allied forces to march to Peking. On 
September 18, 1860, a British reconnoitering party and 
also a French party were ambushed at Changkiawan by 
the Imperial forces and carried to Peking, where they 
were subjected to torture and imprisonment. This 
led to the onward march of the Allies to Peking. As 
an act of revenge, the British set fire to the beautiful 
Summer Palace, Yuan Ming Yuan. Thereupon, the Im- 
perial Court fled to Jehol, leaving Prince Kung to ar- 
range the terms of peace. 

The subsequent treaties of peace signed at Peking on 
October 24, with the British, and on October 25, 1860, 
with the French, concluded the war. An apology was 
to be offered for the obstruction given by the Taku 
forts.17 The Treaty of Tientsin was confirmed and rati- 
fied. The right of diplomatic representatives to reside 
at Peking was confirmed. An indemnity of eight mil- 
lion taels was to be paid to the British and the French 
Government respectively. Tientsin was to be opened 
as a treaty port. Kowloon was to be ceded to Great 
Britain as a buffer to Hongkong. The Americans, un- 


THE OPENING OF CHINA 15 


willing to be unfriendly to China, had exchanged their 
treaty of Tientsin on August 16, 1859, at Peitang. 

During the advance of the allied forces on Peking 
and their subsequent occupation thereof, the Russian rep- 
resentative, General Ignatieff, played a most skillful diplo- 
matic game. On the one hand, he threatened that a Rus- 
sian fleet would be ordered to Peitang. On the other, 
he offered cannon and supplies to the Imperial Court 
and persuaded the Allies to withdraw. Posing as the 
savior of China, he pressed for the cession of the Trans- 
Usuri territory.18 As a reward for his service, he caused 
the Imperial Court to conclude the treaty at Peking on 
November 14, 1860. It was to be a supplement to the 
previous treaty of Aighourn of May 16, 1858, and the 
treaty of Tientsin of June 13, 1858. It was mainly to fix 
unsettled boundary lines and to regulate commercial and 
diplomatic relations. The Eastern frontier was defined; 
the territory North of the Amur was to belong to Rus- 
sia, and that to the South to China.1® By this agreement 
China lost her maritime province east of the Usuri. The 
Western frontier was also delimited.?° 


Thus, it can be said that the opening of China was a 
slow process. Up to 1842, foreign trade was largely 
confined to Canton with Macao as the base, except the 
Russian trade at the Northern frontier. The first war 
between China and Great Britain resulted in the opening 
of South China through the portals of the five treaty 
ports as provided in the Treaty of Nanking, 1842. The 
Treaty of Tientsin of 1858 effected the opening of the 
Yangtze. It was not, however, until 1860, that by the 
Treaty of Peking in 1860, North China was opened 
through the door of Tientsin, and the diplomatic relation 
with the Imperial Court was definitely established. Thus, 
while the process of opening is still going on in China,— 
as the interior of China is, as yet, not open to foreign 
trade and residence,—it may nevertheless be said that 


16 THE DIPLOMATIC HISTORY OF CHINA 


the period of 1689-1860 marked the intial stage of the 
opening of China. 


NOTES TO CHAPTER I 


1. Morse, the International Relations of the Chinese Empire, 
Wolds De A 

mb. DAeLO, i 

His order reads in part as follows: “I now proceed to issue 
my commands. When this order reaches the foreign merchants, 
let them with all haste pay obedience thereto, and let them 
deliver up to the government every particle of the opium on 
board their store-ships. Let the Hong merchants make a list of 
the opium delivered by each firm, in order that all surrendered 
may be accounted for, so that it may be burnt and destroyed, 
and that thus the evil may be entirely extirpated. There must 
not be the smallest atom concealed or withheld. At the same 
time let these foreigners give a bond, written jointly in the 
foreign and Chinese language, making a declaration to this 
effect; ‘That their vessels, which shall hereafter resort hither, 
will never again dare to bring opium with them: and _ that, 
should any be brought, as soon as discovery shall be made of it, 
the opium shall be forfeited to government, and the parties shall 
suffer extreme penalties of law: and that such punishment will 
be willingly submitted to.’ ” 

3. Morse, Vol. I, ibid., p. 229. 

4. Hertslet’s China Treaties, Vol. I, pp. 7-13. 

5. The treaty was abrogated by Article 1 of the Treaty of 
Tientsin, June 26, 1858, and embodied in the subsequent Treaty. 

6. The Convention of April 4, 1846, Hertslet’s China Treaties, 
Vol. 1, pp. 15-16. 

7. Agreement of April 6, 1847, Hertslet, 17-18. 

8. Morse, op. cit., Vol. I, p. 396. 

9, Ibid., p. 398. Lord Palmerston to Mr. Bonham, No. 68, 
August 18, 1849, 

10. Meanwhile the Russians in the North were making ad- 
vances in frontier trade. On July 25th, 1851 (Hertslet, Vol. I, 
pp. 449-454, No. 79), the Treaty of Kouldja was signed between 
Russia and China regulating the trade between Ili and Tarbagatai. 
The appointment of consuls was provided to supervise the fron- 
tier trade. The disputes were to be decided by these agents. 
The frontier commerce was to be freed from all duties. Ex- 
tradition of criminals was provided. Pasturages were to be al- 
loted for beasts of burden of Russian merchants and to be kept 
by them, and plots of ground to be allotted to Russian merchants 
to build their houses and factories. Two sheep out of every ten 
imported at Ili or Tarbagatai were to be given over to the 
Chinese government for an equivalent in cloth. 


THE OPENING OF CHINA 17 


11. Hertslet, op. cit., p. 268, Article 35, Treaty of Whampoa, 
“October 24, 1844; also Morse, Vol. I, op. cit., p. 414. 

12. Article 8, ec aalmeniaag treaty, October 8, 1843, State 
Papers, Vol. 31, 

13. Hertslet, sree 28, Treaty of 1844, p. 267. 

14. Papers relating to ’ proceedings of HL M. naval forces at 
Canton, October to December, 1856, presented to both Houses of 
Parliament, 1857, pp. 1-10. Cf. Morse, Vol. I, op. cit., p. 422. 

15. While the war was proceeding unfavorably against China, 
Russia took advantage of the situation. She caused China to 
sign the Treaty of Aighoun of May 16, 1858. (Hertslet, op. cit., 
454-5, No. 80.) The boundaries was defined along the course of 
the Amur River. “La rive gauche du flueve Amour, a partir 
de la riviére Argoun jusqu’ a l’enbouchure de l’Amour, appar- 
tiendra a Empire de Russie, et Sa rive droite, en aval jusqu’ 
a la riviére Oussouri, appratitnera a TEmpire Ta-Tsing; lis 
territoires et endroits situés entre la riviére Oussouri et la mer, 
comme jusqu’ a pré sent, seront possédis en common par ’Empire 
Ta-Tsing et l’Empire de Russie, en attendant que la frontiére 
entre les deux Etats y soit réglée.” (Art. 1, Hertslet, op. cit., 
p. 454.) The navigation of the Amour, Sungari, and Ussuri 
was to be opened only to the Russian and Chinese vessels. 

16. Hertslet, op. cit., Vol. I, pp. 19-35, No. 6. 

17. Ibid., Vol. I, pp. 48-52, 287-291. 

18. Morse, op. cit., Vol. I, p. 613. 

19. Hertslet, op. cit., Vol. I, pp. 462-471, Article 1. 

20. The civil disputes were to be settled amicably by the 
parties themselves, by means of arbitrators chosen by themselves 
and with the help and cooperation of the consuls and local 
authorities (Article 8). Criminal cases are to be adjudged ac- 
cording to the laws of their own country. 


II 
THE LOSS OF DEPENDENCIES (1860-1895) 


Tue second period of the diplomatic history of China 
dates from the close of the war with Great Britain and 
France (1857-1860) to the end of the war with Japan 
(1894-1895), covering a span of thirty-five years. It 
continues the first period in that it carries on the process 
of the opening up of China, which, as we have seen, 
was the chief feature of the first peroid. It, however, 
has its own distinctive feature which differentiates it 
from the first period. 

This distinctive feature is the gradual loss of China’s 
dependencies. As if Western aggression worked from 
outside, the opening of China was followed by the loss 
of her dependencies; the integrity of her own soil was 
not threatened until the period ensuing. During this 
period China lost no less than nine dependencies,—the 
Liuchiu Islands to Japan in 1881, the Western parts of 
Ili to Russia in 1881, Tongkin and Annam to France in 
1885, Northern Burma to Great Britain in 1886, and 
Sikkim to the same in 1890, and Korea, Formosa, and 
the Pescadores, to Japan in 1895. 

As I have said, this period continues the first period 
in that it carries on the process of the opening up of 
China. During the period other Western nations came 
into treaty relations with China. To the list of the 
Treaty powers, which hitherto was limited only to 
Great Britain, the United States, France, Russia, Nor- 
way and Sweden, were added the newcomers which 
signed their treaties of friendship, commerce and navi- 
gation. 

18 


THE LOSS OF DEPENDENCIES 19 


Germany, September 2, 1861.1 * 
Denmark, July 13, 1863.? 
Netherlands, October 6, 1863.8 
Spain, October 10, 1864.4 7 
Belgium, November 2, 1865.° 
Italy, October 26, 1855." 
Austria-Hungary, September 2, 1869.8 
Japan, 1872.° 

Peru, June 26, 1874.1° 

Brazil, October 3, 1881.11 
Portugal, December 1, 1887.1? t 


These treaties of friendship, commerce and navigation 
were, in general, virtually the same as the Treaty of 
January 26, 1858, signed at Tientsin between China and 
Great Britain, which had served as the model for sub- 
sequent commercial treaties. 

Diplomatic relations between China and the Treaty 
powers were, and remained, for the first half of this 
period most unsatisfactory. The Tsungli Yamen, sup- 
posed to be the Foreign Office, was not organized 
as were the other departments of the government, but 
composed of the leading ministers or Grand Secretaries 
of the Imperial Court. It was really not a department, 
but the Cabinet itself. What is worse, it did not attend 
to the most important diplomatic affairs. It often re- 
ferred them to Li Hung-chang, the viceroy of Chili, who 
dominated the foreign relations of China throughout 
the period. It was he that negotiated most of the 
treaties and conventions of this period, while the 
Tsungli Yamen was merely the office of record. 

Diplomatic intercourse was again hampered by the 

* With a supplementary commercial convention of March 31, 
1880, and an exchange of notes on the same date regarding 
tonnage dues. 

7 With a subsequent convention of Nov. 17, 18775 regulating 
Chinese emigration to Cuba. 

t With a supplementary convention of the same date respecting 


the opium trade of Macao and a separate agreement of the 
same date respecting the collection of duties on opium.14 


20 THE DIPLOMATIC HISTORY OF CHINA 
persistent refusal of the Imperial Court to grant an 
audience with the Emperor, whose minority was offered 
as the excuse. Thus, the foreign ministers remained at 
Peking with their credentials undelivered. And it was 
not until June 29, 1873, when the Emperor had reached 
his majority, that an Imperial audience was granted for 
the first time. 

Diplomatic intercourse was further rendered inade- 
quate by the absence of any Chinese ministers resident 
abroad. While the foreign ministers were pounding on 
the doors of the Tsungli Yamen for proper and satis- 
factory relations and for an Imperial audience, the Chi- 
nese Government remained ignorant of the necessity of 
despatching ministers abroad. Thus, China was de- 
prived of adequate means of diplomatic intercourse with 
other states, except through the foreign embassies that 
had made their residence in Peking. And the situation 
was not corrected until late in 1877 when the first Chi- 
nese envoy, Kuo Sung-tao was sent to London. A 
year later resident ministers were established in most 
of the capitals of Europe and America. 


In addition, the popular feeling of the Chinese toward 
foreigners was yet hostile. They felt that their glorious 
isolation was annulled, and their superiority challenged 
by the Western nations. They resented the enforced 
Occidenta! intercourse, and therefore their feeling was 
anything but friendly toward foreigners. In fact, the 
hostile feeling increased as Western aggression increased. 
The culmination occurred in the Boxer Uprising of 
1900, when the Chinese of North China made a fa- 
natical endeavor to drive the “foreign devils” into the sea. 

During this period one notable manifestation of this 
hostile feeling occurred, namely, the Tientsin Mas- 
sacre of 1870. The French Catholic missionaries estab- 
lished an orphanage in Tientsin and adopted the prac- 
tice of paying any one who delivered to the asylum 


THE LOSS OF DEPENDENCIES eh 


children found or rescued from lack of parental care. 
As a consequence, some evil-minded Chinese kidnaped 
well-to-do children and brought them to the orphanage 
in return for monetary rewards. Thus rumors became 
current that the French missionaries were sending out 
agents to kidnap Chinese children. 

These rumors so infuriated the Chinese of Tientsin 
that on June 21, 1870, they assembled before the French 
Cathedral and demanded redress. The French Consul 
rushed out from his consulate with two pistols in his 
hands and fired at the magistrate who was trying his 
best to control the mob, hitting one of the magistrate’s 
servants. This made the mob furious. The French 
Consul was surrounded and killed. They then set fire 
to the Cathedral and the mission and killed the Sisters 
of Mercy within the asylum.*® 

The French immediately demanded redress, but be- 
cause of pre-occupation with the Franco-Prussian War 
of 1870, they did not resort to force as they had done 
in 1858-1860. The settlement was finally arranged, by 
which the Chinese Government was to pay an indemnity 
of 250,000 taels, to banish the prefect and magistrate 
to Amur for life, to put to death some twenty culprits 
and to send a mission of apology to Paris.%® 

Another instance during this period of hostile mani- 
festation toward the foreigner was the murder of Mar- 
gary in 1875. Margary was a British consul detailed 
to assist the British mission of investigation that was to 
travel from British India to Yunnan through Bhamo. 
While on his way to meet the mission, and on the bor- 
der between Yunnan and Burma, he and his Chinese 
associates were set upon by the untamed tribes of the 
borderland under the jurisdiction of China. The affair 
was finally amicably settled by the Chefoo convention," 
September 13, 1876, signed by Li Hung-chang for the 
part of China and Mr. Thomas F. Wade for the part 
of Great Britain. The convention was divided into three 


22 THE DIPLOMATIC HISTORY OF CHINA 


sections. The first section dealt with the Yunnan case, 
The right of a second mission from India to Yunnan 
was granted (Article 4). An indemnity of 200,000 taels 
was to be paid on demand (Article 5). An Imperial 
letter of regret was to be despatched (Article 6). The 
second section treated of official intercourse and con- 
sular jurisdiction. The British Supreme Court for 
China and the Chinese Mixed Court at Shanghai were 
recognized. Judicial proceedings in criminal and mixed 
cases were defined. The third section dealt with trade. 
Foreign concessions were exempted from likin. Ichang, 
Wuhu, Wenchow and Pakhoi were to be opened to 
trade. Six ports of call were to be opened on the 
Yangtze River, Tatung, Nganking, Hukou, Wusueh, 
Luchikou and Shashih.1* * 

The one redeeming feature, however, of this period 
of unsatisfactory relation was the Anson Burlingame 
mission to the Powers. He was the American Minister — 
in Peking, 1862-1867. When he was about to retire 
from office in November, 1867, he was asked to head 
the Chinese Mission. Urged by Sir Robert Hart, who 
was the sponsor of the Mission,?° he accepted the ap- 
pointment and went abroad on behalf of China. On 
arrival in the United States he toured throughout the 
country with his magnetic oratory, depicting China as 
about to reform and take on the new garb of Western 
civilization. At Washington, on July 28, 1858, he signed 
the Treaty of Washington,** as forming additional arti- 
cles to the Treaty of Commerce between the United 
States and China, June 18, 1858. Free emigration into 
either country was declared to be ‘‘the inherent and in- 
alienable right of man.’ *2 The most favored nation 
treatment with respect to travel, residence and education, 
except the privilege of naturalization, was reciprocally ac- 
corded.?* From the United States he proceeded to Eu- 


*In a separate article, the right of the British Mission to 
Tibet was granted.19 


THE LOSS OF DEPENDENCIES fa 


rope. There he was not so warmly received, nor did 
he succeed in concluding any further treaties with Eu- 
ropean powers, but he did succeed, in a reasonable 
measure, in enlisting the sympathy of the west for 
China, and, to no small extent, in softening the European 
impetuosity for an aggressive policy in China. His un- 
timely death at St. Petersburg, however, brought his 
mission to an abrupt end. 


The first dependency that was to disappear at this 
period from among the satellites of the Chinese Empire 
was the Liuchiu Islands. It was done in such a subtle 
way that it illustrates almost all the later cases of the 
loss of China’s dependencies. The Liuchiu Islands first 
sent tribute to China in 1372 and to Japan in 1451. The 
Princes of the Islands had received investiture of office 
from the Emperor of China since the reign of Yunglo 
(1403-1425). In 1609, however, the Islands were con- 
quered by Prince Katsuma of Japan, and from that date 
on the Princes received their investiture of office from 
both China and Japan. Thus, the Islands remained 
under the joint suzerainty of China and Japan. In 1871 
an incident occurred which brought the question to the 
front. Some Liuchiu sailors were shipwrecked on the 
coast of Formosa and were cruelly murdered by the wild 
tribes thereof. The Japanese immediately made repre- 
sentation to the Peking Imperial Court demanding re- 
dress for the wrong. Li Hung-chang was inclined to 
have China accept the responsibility of the case, but the 
Tsungli Yamen decided that China had no jurisdiction 
over the Eastern half of Formosa—the section inhabited 
by wild tribes, and therefore, declined to assume the 
responsibility. 

Thereupon Japan took advantage of the decision, and 
fitted out an expedition in 1874 to Formosa and began 
to punish the wild tribes, these being considered as out- 
side of the Chinese jurisdiction. This bold affront the 


24. THE DIPLOMATIC HISTORY OF CHINA 


Peking Court resented and demanded that Japan should 
withdraw her forces from Formosa,—a territory belong- 
ing to China,—and supported the demand by the 
despatch of a large Chinese army to Southern Formosa. 
The two hostile armies stood facing each other on the 
Island, and for a while war seemed to be inevitable. But 
through the friendly mediation of the British Minister, 
a settlement was finally effected. The action of Japan 
was justified; Japan pledged to withdraw; China agreed 
to pay an indemnity of half a million taels. After this 
settlement the Liuchiu Prince still sent tribute missions 
to the Peking Court, against which the Japanese Min- 
ister entered vigorous protests. In 1879 General U. S. 
Grant, while on his tour around the world, advised that 
the Liuchiu Islands be partitioned between China and 
Japan. In 1881, however, the Liuchiu Islands were 
definitely recognized as being under the suzerainty of 
Japan. Thus, by a clever maneuver of diplomacy, Japan 
successfully asserted her claim of sovereignty over the 
Liuchiu Islands; and thus, through sheer ignorance and 
incompetency, China lost her claim of suzerainty. Com- 
menting on this, H, B. Morse said: 


“More significant even than this readiness to pay was 
the facile abandonment of the Liuchiu Islands, which 
had paid tributes for five centuries—a prelude to the 
successive lopping off of all the tributary dependencies, 
one after the other—Annam, Korea, Burma; and, more 
or less completed, Manchuria, Mongolia and Tibet.” 7° 


The next Chinese dependency to bear the brunt of 
Western aggression was Ili, a part of the great north- 
western territory of China. In 1866 a series of rebel- 
lions broke out in Ili and Kashgaria. Out of the tur- 
moil emerged the Conquerer Yakub Beg, who established 
his rule over Kashgar and Yarkand. Simultaneously 
the Dungani Tribe rose and conquered the eastern part 
of the northwestern territory, overran the Chinese 


THE LOSS OF DEPENDENCIES 25 


province of Kansu and menaced Shensi and Hupeh. 
In 1867, Tso Tsung-tang, a veteran general of the 
Taiping rebellion, was commissioned to pacify the re- 
gion. He first drove back the Dungani Tribe from 
Hupeh and Shensi, and then he advanced to Kansu 
where he took Suchow after a continuous seige of three 
years. During this time he made his troops grow crops 
and thus fed his own army. Having captured Suchow, 
he advanced straight on and conquered city after city. 
By 1878, he had the entire territory pacified and brought 
under the control of the Chinese Government. 

Prior to this, and taking advantage of the rebellions, 
Russia in 1871 moved troops into Kuldja and occupied 
Ili, promising to restore the territory to China as soon 
as China should be able to assume the functions of a 
territorial sovereign. So when Tso Tsung-tang had 
successfully pacified the rebellions, the Chinese Govern- 
ment demanded the restoration of Ili. In 1879, Chung- 
chow was sent to Russia, and there he negotiated the 
treaty of Livadia, signed on September 15, 1879. The 
western and richer part of Ili was to be ceded to 
Russia. The strategic passes of Tienshan were to be 
also surrendered to Russia. Five million roubles were, 
in addition, to be paid for the restoration of the rest of 
Ili.2® “Such conditions might be imposed after defeat 
in war, but never granted as the result of negotiations.” ?7 
Chungchow was condemned to death and his life was 
saved only through the gracious interposition of Queen 
Victoria. 

The next year, 1880, Marquis Tseng, the son of the 
illustrious General Tseng Kuo-fan of the Taiping re- 
bellion, was sent to Russia to open the negotiation again 
for the restoration of Ili. He succeeded in signing, on 
February 24, 1881, the Treaty of St. Petersburg,?® with 
a protocol *® and supplementary regulations for inland 
trade.*° The Chinese authority in Ili was reéstablished 
(Article 1) *4 but the western part of Ili was ceded to 


26 THE DIPLOMATIC HISTORY OF CHINA 


Russia.2?. The Takkas Valley and all the passes between 
Ili and Kashgaria and the parts of Eastern Turkestan, 
ceded to Russia by Chungchow, were all regained, Rus- 
sia still, however, retaining the western part of Ili, for- 
merly ceded to them by Chungchow.** The Russians 
were to have the right to trade in Mongolia and Ili free 
from payment of duties,** but the Russian caravans were 
to stop at the frontier of China proper, whereas Chung- 
chow had allowed them to march as far inland as Han- 
kow.®® An increased indemnity, however, of nine million 
roubles was to be paid. Thus, the western parts of Ili 
were lost to Russia, and the eastern and greater part 
thereof was rescued from the grasp of Russia only by 
the diplomatic genius of Marquis Tseng, and martial 
zeal of General Tso Tsung-tang. 


The third dependency that was to pass out of the 
control of China was Annam. Annam was conquered 
by China and became a vassal during the Han Dynasty. 
In 1407 it was again conquered by Emperor Yunglo 
of the Ming Dynasty, and this time it was annexed to 
China. As an integral part of the Empire, it was ad- 
ministered in the Chinese manner. It was divided into 
fifteen fus, forty-one chows, and two hundred and eighty 
hsiens.** But twenty years later it reverted to the old 
condition of a vassal state. Ever since then, there had 
been no evidence in existence that it had failed to re- 
ceive the investiture of its King from China or send a 
mission of tribute once in four years.** 

During China’s second war with Great Britain and 
her French ally, Annam began to break away from 
China. In 1858, France and Spain, because of succes- 
sive murders of their missionaries, sent an expedition 
to Annam, The war that ensued continued for three 
years and a half, and terminated with the Treaty of 
Saigon, June»5, 1862. Spain was to receive a part of 
the indemnity of four million dollars; and France 


THE LOSS OF DEPENDENCIES 27 


to obtain the cession of Saigon, three provinces of 
-Cochin-China and the Island of Pulo Condor. 

The next step in the alienation of Annam from China 
was the Treaty of Alliance between France and Annam 
concluded on March 15, 1874. France recognized the 
complete independence of Annam and pledged to pro- 
tect the integrity of the same. Thus, by this pretext, 
France supplanted China as overlord, and Annam 
changed her allegiance. 

The last step in the control of Annam was the estab- 
lishment of the French protectorate by the Treaty of 
June 6, 1884. Annam recognized and accepted the pro- 
tectorate of France. France controlled the relations of 
all foreign Powers, including China, with the Annamese 
Government.** Cochin-China was to be enlarged. Ton- 
kin was to be administered by French residents. Annam 
was still to be under the Annamese except the customs 
and public works. The Red River was to be guarded 
by French military posts. 

Having thus clinched her protectorate over Annam, 
France saw that the only obstacle standing in the way 
of the complete consummation of absorption was China. 
In 1881, China protested through Marquis Tseng at 
Paris against the French recognition of the complete 
independence of Annam and asserted her claim of 
suzerainty. She also reénforced her protest by the 
despatch of Imperial troops who codperated in the Red 
River Basin with the Black Flags, the remnants of the 
Taiping rebels, who had been guarding the Red River 
ever since 1873. In order to remove this obstacle, France 
at last resorted to war. On March 15, 1883, a war 
credit of 5,500,000 francs was voted and an expedition 
was thereafter sent to the Red River. Several engage- 
ments took place, and while the Chinese made a stub- 
born stand, the French were at last successful in cap- 
turing the important centers of the Red River, Hanoi, 
Bontag and Bacninh. 


28 THE DIPLOMATIC HISTORY OF CHINA 


At this juncture, and in order to avoid further blood- 
shed, the convention of Tientsin was entered upon, May 
11, 1884, between Li Hung-chang representing China and 
Commandant Fournier representing France.*? France 
engaged to respect and protect the Chinese frontiers 
bordering on Tonkin (Article 1). China was to with- 
draw her garrisons from Tonkin and to respect the 
treaties between France and Annam (Article 2). France 
was to renounce her demand for indemnity (Article 3), 
but in return was to receive the privilege of frontier 
trade between Annam and China (Article 3). 

An unfortunate misunderstanding, however, soon oc- 
curred, which brought on the war between France and 
China. Li Hung-chang and Commandant Fournier had 
arranged that the Chinese Imperial garrisons should 
withdraw from the Kwangsi border within twenty days, 
that is, by June 6, and from the Yunnan frontier within 
forty days, that is, by June 26, but the French advanced 
to Langson before the lapse of the time allowed for 
evacuation and were severely repulsed at Baclé by the 
Chinese garrisons who had not yet received instruction 
for withdrawal. 

Thereupon the French demanded an indemnity of 
250,000,000 francs but later reduced the amount to 
80,000,000 francs. In July Admiral Courbet sailed with 
his fleet into Foochow Harbor with the cordial welcome 
of the Chinese authorities, but on August 23, and with- 
out previous warning, attacked a Chinese fleet lying in 
the same harbor, and practically annihilated it. The 
Chinese Government thereupon declared war. On sea 
France was victorious, but on land China stood her 
ground. On March 28, 1885, the Chinese recaptured 
Langson. 

On June 9, 1885, the treaty of peace was signed, vir- 
tually reaffirming the convention of Tientsin of May 11, 
1884.4° The French engaged to respect the Chinese 
southern boundary between China and Tonkin (Arti- 


THE LOSS OF. DEPENDENCIES 29 


cle 1). China agreed to respect the treaties between 
_ Annam and France (Article 2). The privilege of fron- 
tier trade between Tonkin and China was granted 
Article 5). Trade regulations between Tonkin and 
Yunnan, Kwangsi, and Kwangtung were to be made by 
a joint commission (Article 6). China was to ask 
France for assistance, both in personnel and material, 
in the construction of railways between Tonkin and 
Yunnan, but this was not to be construed as to give 
exclusive right in favor of France (Article 7).* 


Closely following the alienation of Annam came the 
loss of Burma, a vassal state conquered by the Mongols 
during the reign of Kublai Khan in 1284 A.D.,*? and 
which sent missions of tribute once every ten years. As 
early as 1862, Great Britain seized lower Burma just 
at the time when France seized Cochin-China. In 1886, 
one year after the French occupancy of Annam and the 
subsequent recognition by China of the transfer of 
suzerainty, Great Britain completed her seizure of Up- 
per Burma and won the recognition by China of the 
British rule over the whole of Burma by the convention 
signed on July 24, 1886.48 Burma was still allowed to 
send her decennial tribute mission to Peking, Article 
1).4* China recognized British authority and rule in 
Burma: “China agrees that, in all matters whatever ap- 
pertaining to the authority and rule which England is 
now exercising in Burma, England shall be free to do 
whatever she deems fit and proper.” Article 2).*° 

In 1890 the British protectorate over Sikkim was rec- 
ognized by the convention of March 17, 1890.4° The 
boundary between Tibet and Sikkim was defined (Ar- 
ticle 1). The British protectorate over Sikkim was recog- 
nized by China (Article 2) : “It is admitted that the Brit- 
ish Government, whose protectorate over the Sikkim State 
is hereby recognized, has direct and exclusive control over 
the internal administration and foreign relations of that 


30 THE DIPLOMATIC HISTORY OF CHINA 


state, and except through and with the permission of 
the British Government, neither the ruler of the State 
nor any of its officers shall have official relations of any 
kind, formal or informal, with any other country.” ** 


The last group of dependencies to be severed from 
the control of China were the Pascadores, For- 
mosa and Korea. Korea was a vassal state of China 
for many centuries. In 1637 she was conquered by the 
Manchus. Ever since then, for more than two cen- 
turies the relation of Korea as a vassal state to China 
had never been questioned. In 1876, however, Japan 
made her first move which led to her subsequent control 
of that land. She covenanted with Korea on February 
26 of that year, recognizing the full independence of 
Korea, thus ignoring the suzerainty of China.“* Arti- 
cle 1 read: “Chosen (Korea) being an independent 
state, enjoys the same sovereign rights as does Japan.” *° 
On December 4, 1884, a violent riot broke out. ‘The 
Chinese Resident General Yuan Shih-kai, who later be- 
came President of China, led his Chinese troops and 
proceeded to protect the Imperial Palace of the Korean 
Emperor, but upon his arrival he found the palace oc- 
cupied by Japanese troops. Thereupon, Yuan Shih-kai 
attacked the Japanese guards. A general commotion 
ensued, amidst which the Japanese fought their way out 
from Seoul to Chemulpo, where they boarded a Japa- 
nese steamer. 

To settle this incident, the convention of Tientsin 
was signed on April 18, 1885,°° by Li Hung-chang rep- 
resenting China and by Ito representing Japan. Both 
agreed to withdraw their troops from Korea within four 
months. The Korean King was to be asked to employ 
military instructors of a third Power to drill a sufficient 
force for the preservation of order and peace. “In 
case of any disturbance of a grave nature occurring in 
Korea which necessitates the respective countries or 


THE LOSS OF DEPENDENCIES 31 


either of them to send the troops to Korea, it is hereby 
understood that they shall give, each to the other, pre- 
vious notice in writing of their intention so to do, and 
that after the matter is settled they shall withdraw their 
troops and not further station them there.” °? 

In March, 1894, another riot broke out in Korea led 
by the Tonghaks,—a Korean political party with the 
platforms of reform and expulsion of all foreigners. 
“Down with the Japanese and all foreigners,” was one 
of their watchwords.®*? During the same month another 
event occurred which aggravated the situation. One of 
the leaders of the riot of December, 1884, by the name 
of Kin Ok-Kim, who was in refuge in Japan, was de- 
coyed to Shanghai in March, 1894, and there treacher- 
ously murdered by a Korean. At the request of the 
Korean King, both the murdered man and the murderer 
were conveyed to Korea, where the former was desig- 
nated as a rebel and his dead body decapitated and 
quartered, while the murderer was set free as a national 
hero. 

The Korean King appealed to the Peking Court for 
protection and help in the face of the Tonghak rebellion 
and the general excitement over the murder of Kin 
Ok-Kim. To this appeal the Chinese Government re- 
sponded by the despatch of troops to Korea. In com- 
pliance with the Treaty of Tientsin, April 18, 18%, 
notice was given to Japan, but this did not satisfy Japan. 
She charged China with breach of faith for not giving 
notice before the despatch of troops, though she herself 
sent even a larger body of soldiers. Meanwhile, the 
Tonghaks had been put down by Korean soldiers. Thus, 
although the cause of the trouble was already eliminated, 
the two hostile armies stood face to face in Korea 
watching each other. 

China suggested a simultaneous withdrawal of troops 
and a mutual refrainment from any interference in the 
internal administration of Korea, to which Japan ob- 


32 THE DIPLOMATIC HISTORY OF CHINA 


jected. As a counter move, she suggested that China 
should codperate with her in the reform of the internal 
administration of Korea, from which China dissented. 
Meanwhile an event occurred which led to the declara- 
tion of war on both sides. A British steamer by the 
name of Kowsheng transported Chinese troops to Korea 
under the convoy of Chinese cruisers and flying a British 
flag. It was stopped at Prince Jerome Gulf by a Japa- 
nese squadron. Upon examination of the papers, the 
Japanese signaled “follow me,” which the Chinese troops 
on board the ship refused to obey. The Naniwa then 
hoisted the red flag and opened fire. The Kowsheng 
was sunk in less than half an hour, and most of the 
Chinese soldiers on board were drowned. War was 
thereupon declared by both countries. 

Let us endeavor to find the real motives of Japan 
which brought about this war. China had already con- 
sented to withdraw; the Tonghaks had been suppressed ; 
and yet Japan still refused to be satisfied. She insisted 
that China should codperate with her in the reforma- 
tion of Korea, when it was an open question as to the 
legal and ethical rights of Japan in enforcing reforms 
on another country. The real motives, as we find, how- 
ever, appeared to be that Japan wished to incite a war 
with China at that juncture, so that she could achieve 
her own position of equality. For up to this time she 
had been making desperate endeavors to secure the 
abrogation of extraterritoriality and tariff restraint 
from the Treaty Powers, and so far she had only suc- 
ceeded in gaining the consent of Great Britain on June 
16, 1884. She needed a demonstration of her military 
prowess so that she could convince the rest of the 
Powers that she was entitled to a complete recovery 
of her judicial and tariff autonomy. Added to this was 
the motive that the integrity of Korea was necessary 
for the safety of Japan. In fighting for the independ- 
ence of Korea, Japan was fighting for her own inde- 


THE LOSS OF DEPENDENCIES 33 


pendence and integrity. This was verified by the testt- 
mony of a Japanese diplomatic representative in Europe: 


“This, at least, I can tell you for certain, we neither 
can nor will leave Korea again until our aim has been 
obtained in one way or another. We are fighting in 
Korea for our own future—I might also say for our 
independence. Once let Korea fall into the hands of a 
European power, and our independence will be threat- 
ened, °° 


The victories of Japan both on land and sea are known 
to the world. The war was finally concluded by the 
Treaty of Shimonoseki, signed on April 17, 1895.5 The 
independence of Korea was fully recognized by China 
(Article 1). The Liaotung peninsula, Formosa and the 
Pascadores were to be ceded to Japan (Article 2). An 
indemnity of 200,000,000 Kuping taels was to be paid 
(Article 4). All previous treaties between China and 
Japan were to be terminated and new treaties, based on 
“the treaties, conventions and the regulations now sub- 
sisting between China and the European powers,” were 
to be concluded (Article 6).°7 The most favored nation 
treatment was to be accorded to Japan and her subjects 
(Article 6). Shashih, Chung-King, Soochow, and Hang- 
chow were to be opened to trade (Article 6).°° 

Hardly had the treaty of Shimonoseki been made 
than the Three-Power intervention occurred. Russia, 
Germany and France each presented identical notes, 
mutatis mutandis, to the Japanese Government advising 
the latter not to occupy the Liaotung Peninsula in per- 
petuity. Consequently the convention was signed on 
November 8, 1895,°° for the retrocession of Liaotung, 
in return for which China paid an additional indemnity 
of 30,000,000 Kuping taels. 

A year later, in pursuance of Article 6 of the Treaty 
of Shimonoseki providing for the annulment of all pre- 
vious treaties between China and Japan and for the 


34 THE DIPLOMATIC HISTORY OF CHINA 


conclusion of new treaties, a treaty of commerce and 
navigation was signed on July 21, 1896, virtually plac- 
ing Japan on a par with the other treaty Powers. Con- 
sular jurisdiction for the Japanese subjects was provided 
(Articles 20, 21, 22).°° The most favored nation treat- 
ment was accorded to Japan and her subjects “in all 
privileges, immunities and advantages that may have 
have been or may hereafter be granted by his majesty 
the Emperor of China to the government or subjects 
of any other nation’ (Article 25).°%* A subsequent 
protocal was signed at Peking on October 19, 1896, re- 
specting the Japanese settlements in the newly opened 
ports and also other matters.®* 


This concludes the second period of the diplomatic 
history of China. In recapitulation, it may be said that 
it witnessed two general tendencies or forces at work. 
First, it witnessed the further opening of China which 
was a continuation of that of the first period. Addi- 
tional treaty ports were opened to trade; more commer- 
cial treaties were concluded; and other Western states 
arrived to enter into treaty relations with China. As a 
reaction against this unwelcome intercourse and aggres- 
sion, hostile feeling was engendered among the Chinese 
which manifested itself in spasmodic murders of mis- 
sionaries and finally culminated in the Boxer Uprising, 
which we shall discuss in the next chapter. Second, 
this period witnessed the initial onslaught of. Western 
aggression resulting in the loss, on the part of China, 
of a large number of her dependencies. It witnessed 
the loss of the western part of Ili to Russia, of Annam 
and Tonkin to France, of Burma and Sikkim to Great 
Britain, and of the Liuchiu Islands, the Pascadores, For- 
mosa and Korea to Japan. The attack on the integrity 
of China did not, however, occur until the next period 
when we shall note the general scramble for leases and 
concessions. 


THE LOSS OF DEPENDENCIES 35 


NOTES TO CHAPTER II 


Hertslet’s China Treaties, Vol. 1, pp. 331-350. 

Ibid., pp. 249-258. 

Ibid., pp. 407-414. 

Ibid., pp. 512-522. 

Ibid., pp. 522-527. 

Ibid., pp. 223-234. The Belgians were granted the privilege 
of trade by an Imperial letter dated July 25, 1845, which, how- 
ever, did not assume a treaty form. 

7. Ibid., pp. 354-361. 

8. Ibid., pp. 215-223. 

9. State papers, Vol. 62, pp. 321-329. 

10. Hertslet, op. cit., pp. 415-420. With a special agreement 
of the same date respecting Chinese immigrants in Peru 
(Hertslet, Vol. I, pp. 420-422). 

11. Ibid., pp. 234-240. 

12. Ibid., pp. 423-434. 

13. Ibid., pp. 434-435. 

14. Ibid., pp. 435-436. A treaty of friendship, commerce and 
navigation was signed between Portugal and China on Aug. 
13, 1862, but it was not ratified because of the dispute over the 
sovereignty of Macao—state papers, Vol. 55, pp. 790-800; Herts- 
let, ibid., p. 422. 

is. For a full account see H. B. Morse, The International 
Relations of the Chinese Empire, Vol. II, pp. 239-261. 

16. Ibid., Vol. II, pp. 257-258. 

ay. Hertslet, No. 12, pp. 73-80. 

18. Ibid., p. 77. 

19. Also see No. 14, pp. 84-88; Hertslet, No. 16, pp. 90-91; 
No. 18, pp. 94-96. 

20. Morse, op. cit., Vol. 2, p. 189. 

21. Hertslet, No. 96, pp. 554-557. 

Bey ibid, p. 556, Art. 5. 

23. Ibid., pp. 556- 557, Arts. 6 and 7; also see No. 97, pp. 558- 
560, Hertslet, p. 561, Art. By oD. Gas Art, 4; No. 99, pp. 563-565; 
Dp. 563, Art. 1. 

25. Morse, op. cit., Vol. II, p. 275. 

26. Ibid., Vol. TA, B.-932: 

27. Ibid., Vol. II, p. 332. 

28. State papers, Vol. 72, pp. 1143-1150; Hertslet, No. 85, pp. 
483-499, 

29. State papers, Vol. 72, pp. 1150-1151. 

30. State papers, Vol. 72, pp. 1151-1157. 

31. State papers, Vol. 72, p. 1144; Hertslet, p. 483, Art. 1. 

32. State papers, Vol. 72, p. 1144; Hertslet, p. 484, Art. 1. 

33. Morse, op. cit., Vol. 2, p. 338. 

34. Hertslet, p. 488, Art. 12. 

35. Morse, op. cit., Vol. 2, p. 338. 


DR wD 


36 THE DIPLOMATIC HISTORY OF CHINA 


36. Ibid., Vol. 2, p. 341. 

37. Ibid., Vol. 2, pp. 341-342. 

38. Ibid., Vol; 2) p. 35h. 

39. Hertslet, No. 44, pp. 293-294. 

40. Hertslet, No. 46, pp. 296-300. 

41. State papers, Vol. 76, p. 246, et. seq. 

42. Encyclopedia Britannica, 11th edition, Vol. 4, p. 843. 

43. Hertslet, No. 15, pp. 88- 90. 

44. The Burmese sent her usual mission of tribute in 1895, but 
after that year the tribute missions stopped. 

45. The boundary between Burmah and China was later deter- 
mined by a subsequent convention of March 1, 1894 (Hertslet, 
No. 20, pp. 99-109). Kulong was given to Great Britain and 
Kokang to China (Art. 3). Munglem and Kiang Hung were 
ceded to China, for which China pledged not to alienate them 
without the previous consent of Great Britain. This convention 
of 1894 was modified by a subsequent agreement of Feb. 4, 
1897 (Hertslet, No. 22, pp. 113-119), by which China, in con- 
sideration of the consent of the British Government “to waive 
its objections to the alienation by China, by the Convention with 
France of June 20, 1895, of the territory forming a portion of 
Kiang Hung” (Hertslet, Vol. 1. p, 113), was to compensate 
Great Britain by territorial cessions including the State of 
Kokang and perpetual leases of certain tracts south of the 
Namwan River. The non-cession of Munglem and Kiang Hung 
without the previous consent of Great Britain was reiterated. 
A special article opened, as treaty ports, Wuchow, Sanshui and 
Kong Kun, and as ports of call, Kongmoon, Komchuk, Shuihing 
and Takhing. The convention of September 6, 1894 (Hertslet, 
pp. 110-113) affected the junction of the Chinese and Burmese 
telegraph lines. 

46. Hertslet, No. 17, pp. 92-94. 

47. To this convention was later appended a set of regulations 
signed on Dec. 5, 1893. Hertslet, No. 19, pp. 96-98. 

48. State papers, Vol. 67, pp. 530-533 

49. State papers, Vol. 67, deve |B 

50. Hertslet, No. 61, pp. 361-362. 

51. State papers, Vol. 76, pp. er iG. 298; Hertslet, Vol. I, p. 362. 

52. Morse, op. cit., Vol. IIT, 19, 

53. Kélnischer Zeitung, Tule 25, 1894, cited in North China 
Herald, Sept. 7, 1894, quoted in Morse, apy cits VOLE pavee: 
ndtpState papers, Vol. 87, pp. 799- 804; Hertslet, pp. 362- 369, 


57. Hertslet, p. 365, Art. 6. 

58. Hertslet, pp, 368-369. 

59. State papers, Vol. 87, pp. 1195-1197; Hertslet, Vol. I, No. 
63, pp. 370-373. 

60. Hertslet, p. 379; cf. State papers, Vol. 62, pp. 322 and 323, 
Arts. 8 and 12, : 

61. Hertslet, p. 381, Art. 25. 

62. Hertslet, No. 65, pp. 382-383, 


Iil 


THE INTERNATIONAL STRUGGLE FOR 
CONCESSIONS (1895-1911) 


Tue third period of the diplomatic history of China 
dates from the close of the Chino-Japanese War (1895) 
to the beginning of the Chinese Revolution (1911). It 
is a period characterized by the international struggle 
for concessions. The first period (1689-1860), as we 
have seen, opened China to the trade and intercourse of 
Western nations. The second period (1860-1895), while 
continuing the first in the process of the opening of China, 
was chiefly characterized by the loss of dependencies. 
The third period, which is our present theme, witnessed 
the international struggle for concessions, which is prob- 
ably the most interesting in our study of the foreign 
relations of China. 

The last period, by the loss of her dependencies, had 
exposed China to the attacks of the West. For centuries 
China had surrounded herelf with a cordon of depend- 
encies which were to protect her from assault from the 
outside world. But now a large number of these depend- 
encies were taken away and China was exposed to the 
onslaught of Western Powers. 

Further, the Chino-Japanese War revealed to the world 
the relative incompetency of the Chinese Government. 
Hitherto China had fought with Western Powers, and 
although she had been beaten several times, she was nev- 
ertheless not considered so weak as to attract the un- 
scrupulous aggression of the West. In fact, during the 
Chino-French War of 1884-1885, the Chinese army stood 
her own ground very well. But the war with Japan 
changed the opinion of the world. Japan was consid- 

37 


38 THE DIPLOMATIC HISTORY OF CHINA 


ered a secondary power in Asia. By one stroke she 
brought the giant to the ground. This was a victory 
of one Asiatic state over another. The world became 
convinced that China was following in the wake of Africa 
--and that the nations should lose no time in taking what 
they could. | 

Thus, during this period, China’s integrity was ex- 
posed to Western aggression, first by the loss of de- 
pendencies and then by the disastrous defeat suffered 
at the hand of Japan. From this time on, until checked 
by the Chinese Revolution of 1911, the diplomatic his- 
tory of China was marked by a series of unscrupulous 
attacks on the sovereignty and integrity of China. And 
this onslaught could not but produce the most strenu- 
ous reaction on the part of the Chinese, which mani- 
fested itself in the rise of Chinese nationalism. In 
its first blind reaction, it took the form of the Boxer 
Uprising, by which the Chinese, and especially the 
Manchu rulers, thought that they could liberate them- 
selves from the deadly intrusions of the West. Find- 
ing this impossible, as evidenced in the disaster of 1900, 
the next reaction took the form of the Chinese Revo- 
lution of 1911, by which the Chinese wrested the reins 
of government from the incompetent hands of the Man- 
chus and sought to find shelter in their own republican 
form of government. 

Besides Chinese nationalism, this international strug- 
gle for concessions brought into existence another con- 
dition of affairs, which is commonly called the sphere 
of interest or influence. In the heat of contest, the ag- 
gressive states carved out the various spheres of influ- 
ence for themselves, Russia in North Manchuria and 
Outer Mongolia, Japan in South Manchuria and Inner 
Mongolia, Germany in Shantung, Great Britain in the 
Yangtze Valley, Thibet and Szechuan, France in Kwang- 
tung, Kwangsi and Yunnan. 

And to create these spheres of influence the Powers em- 


THE STRUGGLE FOR CONCESSIONS 39 


ployed definite means. The first step was to secure a 
base, from which to radiate their forces of influence. 
After this, the railroad was usually employed to extend 
from the base to the interior, thus dominating the eco- 
nomic life of the sphere. To finance the railway, min- 
ing, and other forms of economic exploitation, a foreign 
bank was usually established. Thus came into existence 
what was commonly called the policy of conquest by rail- 
road and bank. And in order to avoid international con- 
flicts, the powers made agreements among themselves 
that they would respect each other’s spheres of influence. 


Having seen the general characteristics of the period, 
let us now return to the point where we left off at the 
last period, that is, the Chino-Japanese War. As we 
have seen, this war imposed on China an indemnity of 
230,000,000 taels to be paid in seven years with interest 
or in three years without interest. In order to save in- 
terest, the Chinese Government strove to pay off the in- 
demnity in three years. To this end, foreign loans were 
contracted, and here we first witnessed international 
rivalry or struggle. France and Russia obtained in 1895 
the concession of the first loan of 400,000,000 francs. 
This excited the jealousy of Great Britain, who feared 
that the success of the Franco-Russian diplomacy would 
upset the balance of power and hurt British prestige. 
So the subsequent loans were obtained by Great Britain 
in partnership with Germany.? 

As we recall, the retrocession of Liaotung was due to 
the tripartite intervention on the part of Russia, Ger- 
-many and France. These three Powers did not engi- 
neer their intervention merely for the sake of China, 
but rather to charge the account of service to the Em- 
pire. On June 20, 1895, by two separate conventions, 
France obtained a delimitation of the boundaries be- 
tween Tonkin and China, much in favor of France, 
including the alienation of a part of Kiang Hung,* for 


40 THE DIPLOMATIC HISTORY OF CHINA 


which China was later penalized by Great Britain by the 
agreement of February 4, 1887, according to which 
China lost her sovereign rights over some frontier lands 
bordering on Burma. France also secured the opening 
to trade of Lungchow, Mengtze, Ho-Keou,* and Szemao,® 
special mining privileges in Yunnan, Kwangsi, and 
Kwangtung,’ and the right of extension of the Annam 
railway into China.§ 

Russia was not slow in exacting her share of reward. 
By the Convention of September 8, 1896,° she secured 
the right to extend the Trans-Siberian Railway through 
Northern Manchuria to Vladivostok, thereby obviating 
the longer and more expensive route of running along 
the Amur and Ussuri rivers, earmarked Kiaochou and 
Port Arthur as the naval bases of Russia, and obtained 
the mining privileges in Heilungkiang, Kirin, and along 
the Long White Mountain Ranges. 


Germany was the third of the tripartite Powers that 
composed the Liaotung intervention of 1895. She waited 
for her chance of obtaining her reward. When, in No- 
vember, 1897, two of her Catholic priests were murdered 
in Kiachwang, Shantung, she immediately seized Kiao- 
chow Bay and demanded its lease besides redress for 
the murder. As a consequence of this high-handed ac- 
tion, the Kiaochow lease convention was signed on March 
6, 1898.2° Under Section 1 Kiaochau was leased to Ger- 
many for ninety-nine years (Art. 2). The jurisdiction 
over the leased territory was to be exercised by Germany 
(Art. 3). A neutral zone of fifty kilometers was pro- 
vided, in which Germany was to have the right of free 
passage of her army, and China was to abstain from 
taking any measures without the previous consent of the 
German Government. Under Section 2 Germany ob- 
tained the concessions of two railways in Shangtung, one 
to run from Kiaochau to Chinan and the Shantung fron- 
tier, the other from Kiaochau to I-Chou, and thence past 


THE STRUGGLE FOR CONCESSIONS 41 


Laiwuhsien to Chinan. Under Section 3 she secured the 
first option in any undertaking in which foreign assist- 
ance was needed."° 

This was the first wanton assault on the sovereignty 
and integrity of China. By the doctrine and operation 
of the balance of power, the other European states 1m- 
mediately followed suit. Russia seized Port Arthur and 
Talienwan in December, 1897, and later demanded the 
lease thereof. Consequently the agreement was signed on 
on March 27, 1898.11. Port Arthur and Talienwan were 
leased to Russia (Art. 1) for a term of twenty-five 
years, with the privilege of the renewal (Art. 3). The 
jurisdiction of the leased territory for the term of the 
lease, was to be exercised by Russia (Art. 4). A neutral 
territory north of the leasehold was to be provided, in 
which the Chinese Government was still to retain its 
jurisdiction, but was not to send any troops except with 
the consent of Russia (Art. 5). Port Arthur was to be 
a closed port (Art. 6), which only Chinese and Russian 
vessels were allowed to use, but Talienwan, with the 
exception of a part reserved like Port Arthur, was to 
be an open port (Art. 6). The right of extension from 
a point in the Trans-Siberian Railway in Northern Man- 
churia to a point in Liaotung Peninsula was granted on 
the same principle as that applied in the grant of the 
Trans-Siberian Railway through Northern Manchuria in 
1896. Subsequently, on May 7, 1898, an additional 
agreement between China and Russia was signed re- 
specting the boundaries of Port Arthur and Talienwan ?? 
and defining the Russian rights in the neutral zone. 

Following upon the heels of Russia came France. She 
demanded the lease of Kwangchouwan, the right to build 
a railway from Tonkin to Yunnan, and a representative 
of the French nationality for the head of the Chinese 
Post Office staff. By an exchange of notes of April 
9/10, 1898,18 all these concessions were granted. In the 
draft convention for the lease of Kwangchouwan of 


42 THE DIPLOMATIC HISTORY OF CHINA 


1898,14 the lease was arranged for ninety-nine years 
(Art. 1); the French administration of the leased terri- 
tory was conceded (Art. 3); the right of fortification 
and garrison by France (Art. 4) and the concession 
of a railroad from Kwangchouwan to Leichou or to a 
point in the neighborhood thereof (Art. 7) were also 
granted. 

Compelled by the driving force of the balance of 
power, Great Britain could not stand idle. To compen- 
sate for the damages incurred by the gains of the other 
Powers, Great Britain likewise stretched out her hands 
and snatched concessions and leases necessary for self- 
defense and for the preservation of the balance of power. 
On February 4, 1897, by the agreement modifying the 
Convention of 1894 relative to the boundaries between 
Burma and China, in order “to waive its objections to 
the alienation by China, by the Convention with France 
of the 20th of June, 1895, of territory forming a por- 
tion of Kiang Hung, in derogation of the provisions of 
the Convention between Great Britain and China of the 
Ist March, 1894,” Great Britain secured a re-delimita- 
tion of the boundaries between Burma and China, much 
to the favor of Great Britain, and also obtained a con- 
cession for the connection of the Yunnan and Burmese 
Railway.4® By the Convention of June 9, 1898, the 
territory of Hong Kong was extended to include Deep 
Bay and Mirs Bay and the lease of the extension was 
for ninety-nine years.‘7 Finally, by the Convention of 
July 1, 1898,"* Great Britain obtained the lease of Wei- 
haiwei, “for so long a period as Port Arthur shall re- 
main in the occupation of Russia.” ?® “The territory 
leased shall comprise the Island of Liu Kung, and all 
the islands in the Bay of Weihaiwei, and a belt of land 
ten English miles wide along the entire coast line of 
the Bay of Weihaiwei. Within the above-mentioned ter- 
ritory leased Great Britain shall have the sole jurisdic- 
tion.” 2° On February 13, 1898, Great Britain further 


THE STRUGGLE FOR CONCESSIONS 48 


obtained the declaration that the Inspector-general of the 
Maritime Customs should be a British subject while 
_ British trade predominates.*+ 

Following the example of the other great Powers of 
Europe, Italy, in February, 1899, also attempted to lease 
a naval base in China. She demanded the Sanmen Bay 
in Chekiang. But she came too late. The control of 
the Peking Court had already changed hands from the 
feeble Emperor Kwang Hsu, to the master mind, the 
Empress Dowager, Tse Hsi. The latter ordered the 
Yangtze viceroys on the seacoast to make preparations to 
resist with force. In face of this determined resistance, 
Italy withdrew her demands. 

In addition to leases and concessions, the Powers put 
in the prior claims on their various spheres of influence 
by means of the declaration of non-alienation. On their 
face these declarations were nothing more than mere 
utterances from a territorial sovereign that these various 
spheres of influence would not be ceded in any form 
to any power; but in reality, and in spirit, the Powers 
understood them to mean that, by receiving these pledges 
of non-alienation, they had a prior claim to their respec- 
tive spheres of influence. Accordingly, France obtained 
the declaration of non-alienation of the Island of Hainan 
on March 15, 1897.22 Later, on April 10, 1898, she 
secured the declaration of non-alienation of the terri- 
tory bordering on Tonkin.?* Likewise, on February 11, 
1898, Great Britain procured the declaration of non- 
alienation of the Yangtze Valley.2* On April 26, 1898, 
Japan received a declaration concerning the non-aliena- 
tion of Fukien.2*> By an exchange of notes annexed to 
the Treaty of May 25, 1915, respecting the Province of 
Shantung, Japan also secured the pledge from China 
that “within the Province of Shantung or along its coasts 
no territory or island shall be leased or ceded to any for- 
eign power under any pretext.’”?° By the Presidential 
Mandate of May 13, 1915,?7 and in response to the 


44. THE DIPLOMATIC HISTORY OF CHINA 


Twenty-one Demands of Japan, China made the declara- 
tion of non-alienation of the entire coast of China. 
. 

The leases and declarations of non-alienation having 
thus been obtained, the international struggle entered into 
a second stage, which, though not so dramatic as the 
first violent assaults, was nevertheless animated by the 
same spirit of international rivalry and resulted probably 
in the same derogation, though in a much milder and 
safer form, of Chinese sovereignty. The foreign strategic 
railroads in China were projected by the three powers 
composing the tripartite Liaotung intervention of 1895. 
As we have seen, by the “Cassini” Convention of 1896, 
Russia secured the right for the Trans-Siberian Railway 
to cross Northern Manchuria to Vladivostok, and later 
by the Convention for the lease of Port Arthur and 
Talienwan, the right to construct a line connecting a 
point in the trans-northern Manchurian line (Harbin), 
to a point in the Liaotung Peninsula. By the Treaty 
of June 20, 1895, France obtained the right to extend 
her Annam Railway into Chinese territory, which was 
later confirmed by an exchange of notes in 1898. Like- 
wise, by the Kiaochou Convention, Germany procured 
the right for the construction of two railways in Shan- 
tung. All these are foreign-owned and controlled lines. 
As a compensation for the overturn of the balance of 
power, Great Britain obtained the right to connect the 
Burmese Railway with the Yunnan Railway. 

These, however, were but the beginning of the inter- 
national scramble for railway concessions in China. Fol- 
lowing the grant of these strategic railways, the com- 
mercial powers all contested for railway concessions. 
The most crucial struggle was over the Peking-Hankow 
line, which was to be the most important trunk line, 
connecting the capital of China with the heart of the 
Yangtze Valley. Great Britain, the United States, and 
Belgium (supported by France and Russia) all contested 


THE STRUGGLE FOR CONCESSIONS 45 


for this premier concession. Finally Belgium underbid 
all the others and won the concession.?* Great Britain 
was most chagrined over the Belgian success, especially 
when the latter was supported by her rivals, Russia and 
France, and so she demanded a series of concessions in 
the Yangtze Valley, partly to compensate the damage 
she had suffered in the overturn of the balance of power, 
and partly to forestall any future intrusion of railway 
enterprise by the other powers into the Yangtze Valley. 
By a vigorous demand and naval demonstration, she 
procured the concessions: the Peking-Newchang,”® the 
southern portion of Tientsin-Pukow, the Shanghai-Nan- 
king,®° the Pukow-Hsinyang, the Soochow-Hangchow- 
Ningpo, the Kowloon-Canton railways, and the right of 
extending the Burmese Railway as far as the Yangtze 
Valley, besides valuable mining rights in Shansi,*1 Ho- 
nan,*? Chekiang ** and Chili. Likewise, as a compensa- 
tion, the American China Development Company obtained 
the concession ** of the Hankow-Canton Railway with 
the proviso that the rights should not be transferred to 
any other nationality than American. Similarly, Russia 
procured the concession of the Chingting-Taiyuan,®* and 
France, the Lungchow-Nanning and the Pakhoi-Nan- 
ning,*® and Germany, the northern section of the Tientsin- 
Pukow Railway. 

This international struggle for concessions and leases, 
as we have just seen, could not but call forth a natural 
reaction; for unless this process of spoliation should be 
stopped, the days of the independence of China would be 
numbered. The reaction outside of China came from 
the United States, which had successfully forestalled the 
extension of the European game of the balance of power 
to the Western Hemisphere by the enunciation of the 
Monroe Doctrine. For fear that the operation of the 
European balance of power would obliterate China from 
the map, and to prevent any further aggravation of the 
various spheres of influence, John Hay announced the 


46 THE DIPLOMATIC HISTORY OF CHINA 


Open Door doctrine in 1899 by a circular to the Powers,*? 
first to England, Germany and Russia on September 6, 
1899, and then later to France, Italy and Japan. In this 
circular note, John Hay set forth the doctrine of equal 
opportunity of trade in China. To this all the Powers 
addressed, except Russia, who made a more or less in- 
definite reply,?* gave their assent. Later, in 1900, when 
the Boxer Uprising imperiled the integrity of China, John 
Hay again, on July 3, 1900, reaffirmed the principles of 
the Open Door policy, but this time he openly pro- 
claimed that the United States policy in China was, not 
only to maintain the equal opportunity of trade, but also 
to preserve the integrity of China.*® 

The reaction within China first took the form of the 
reform in 1898. Under the guidance of Kang Yii-wei, 
Emperor Kwang-Hsu attempted to reform China by pa- 
per edicts. But in his zeal for reform, he injured the 
vested interests of the conservative officials, and thus the 
coup de’etat occurred in 1898, bringing into power Em- 
press Dowager Tse Hsi. With the reappearance of the 
latter the reaction took a wrong direction. Bigoted and 
anti-foreign, she turned her efforts against the invasions 
of the Western states, and, availing herself of the Boxer 
movement then on foot with the object of driving out all 
“foreign devils,” she secretly encouraged the Boxers and 
thus brought to pass the Uprising of 1900. 

The effects of this Uprising are known to all the world. 
Having violated the law of nations in an attack on the 
foreign legations, China stood a “criminal” before the bar 
of civilization. Resumption of friendly relations, how- 
ever, was finally established by the Protocol of Septem- 
ber 7, 1901.4° Therein were provided reparations for 
the assassination of Baron von Kettler, German Minister 
at Peking (Art. 1), and of M. Suyiyama, Chancellor of 
the Japanese Legation (Art. 3), and indemnity of 450,- 
000,000 Haikuan taels to be repaid in thirty-nine years 
at four per cent interest and secured on the Chinese Mari- 


THE STRUGGLE FOR CONCESSIONS 47 


time Customs, Chinese native customs in the open ports, 
and the salt Gabelle (Art. 6), the improvement of Peiho 
and Whangpoo rivers (Arts. 6 and 11), the rights of 
an exclusive legation quarter and of the stationing of 
legation guards (Art. 7), the razing of the Taku forts 
(Art. 8), the abolition of the Tsungli Yamen, and the ~ 
institution of a regular Foreign Office (Art. 12). 

In pursuance of Article 6 of the Protocol of Septem- 
ber 7, 1901, providing for the raising of tariff duties to 
an effective five percent and the conversion of ad valorem 
duties to specific duties, a subsequent agreement was 
signed on August 29, 1902, stipulating new rates of 
tariff in accordance with the average prices of 1897, 1898 
and 1899.4, Likewise, in pursuance of Art. 11 of the 
Protocol of 1901 providing for amendment and revision 
of the Treaty of Commerce and Navigation,*? Great 
Britain and China entered into the treaty of September 
5, 1902, respecting commercial relations. The Likin was 
to be abolished, and the Chinese tariff to be raised to 
not more than twelve and one-half per cent on imports 
and seven and one-half per cent on exports (Art. 8, 
' Preamble), provided, however, China should secure the 
consent of the other states enjoying, or who may enjoy, 
the most favored nation treatment before January 1, 
1904, without conceding any political concession or any 
exclusive commercial concession.“ Changsha, Wanh- 
sien, Nganking, Waichow, and Hongmoon were to be 
opened to trade (Art. 8, Sec. 12). The extraterritorial 
rights were to be surrendered upon the satisfactory re- 
form of China’s judicial system (Art. 12). Similarly, 
Japan entered into the supplementary treaty of commerce 
and navigation on October 8, 1903,4°8 opening Mukden 
and Tatungkou to trade (Art. 10), and providing almost 
similar stipulations regarding the abolition of Likin 
(Art. 1) and extra-territorial rights (Art. 11) as found 
in the British commercial treaty of 1902. Likewise, 
the United States entered into the treaty of October 8, 


48 THE DIPLOMATIC HISTORY OF CHINA 


1903,44 opening Mukden and Antung to trade (Art. 12) 
and stipulating similar provisions concerning the substi- 
tution of tariff surtax for the abolition of Likin (Art. 4) 
and the surrender of extraterritorial rights on condition 
of satisfactory judicial reform (Art. 15). 


After the final settlement of 1901, the focus of atten- 
tion of the world was shifted from China to the im- 
pending conflict between Russia and Japan. From the 
Boxer Uprising to the Russo-Japanese War, the diplo- 
matic history of China was rather quiet, and the inter- 
national struggle for concessions seemed to have come to 
an end. Although there were a few minor railway con- 
cessions granted, such as the Cheng-Tai Railway to 
France in 1902, the Kaifeng-Honan Railroad to Belgium 
in 1903, the Taokow-Chinghua Railroad to Great Britain 
in 1905,*5 and the Changchun-Kirin Railway to Russia in 
1902,*® the center of interest was shifted to the coming 
grapple between Russia and Japan. Although the con- 
test was between two foreign powers, yet the subject 
of the struggle was the integrity of China in Manchuria 
and the definition of the spheres of influence in China, 
and for this reason this conflict can be well regarded 
as a vital part of the diplomatic history of China. 

Taking advantage of the Boxer Uprising, Russia oc- 
cupied Manchuria. Her troops occupied the various 
strategic points in Manchuria. She entered Mukden on 
October 2, 1900. She hoisted her flags over the New- 
chang Customs House on August 4, 1900. On August 25 
she declared ** that her occupation of Manchuria was a 
mere temporary measure of military necessity, and that 
as soon as peace and order should be restored she would 
withdraw her troops, “provided such action did not meet 
with obstacles caused by the proceedings of other 
Powers.” #8 

When the Allied forces had arrived at Peking and re- 
lieved the beleaguered legations, Russia pretended to be 


Pi oT RUGGLE FOR CONCESSIONS’. 49 


the best friend of China: she proposed that the Allied 
forces and agents should withdraw from Peking to 
Tientsin and there wait for negotiations.*® Her proposal 
failing to receive support, she then attempted to con- 
clude a separate treaty of peace with China, with a 
view to making Manchuria her exclusive sphere of in- 
fluence, if not virtually her protectorate. In November, 
1900, Admiral Alexieff made an agreement with the 
Tartar General Tseng of Mukden,®° by which the 
Province of Fengtien was to be disarmed, its mili- 
tary government was to be invested in Russian hands, 
its civil government, though left in the hands of 
Chinese officials, was yet to be under the supervision 
of a Russian political resident to be stationed at 
Mukden. Against the ratification of this agreement, 
Japan, Great Britain, Germany and the United States 
made formal representations of protest.°** Because 
of the opposition the agreement failed to obtain the 
necessary ratification. Thereupon Russia made a fur- 
ther attempt by the conclusion of what was known as 
the Lamdorff-Yangyu Convention,®? restricting China’s 
sovereign rights with respect to armament in Manchuria, 
the employment of foreign instructors other than Rus- 
sians to drill troops in North China, conceding of mining 
rights and the construction of railways in Manchuria, 
Mongolia, Tarbagatai, Ili, Kashgar, Yarkand, Khoten, 
etc., and at the same time granting to Russia a railroad 
concession from a point in the Russian Manchurian line 
to the Great Wall in the direction of Peking. As against 
the pressure of Russia to ratify the convention, the Em- 
peror of China, on February 28, appealed to Germany, 
Japan, Great Britain and the United States for mediation. 
In response vigorous representations were made caution- 
ing China not to sign the convention. Thus the second 
attempt of Russia was foiled. 

Negotiations continued. Proposals and  counter- 
proposals were exchanged. In addition to the conven- 
tion, Russia now pressed for the monopoly of the indus- 


50 THE DIPLOMATIC HISTORY OF CHINA 


trial development of Manchuria to be granted to the 
Russo-Chinese Bank.®* Against the monopoly, John Hay 
protested.*4 Likewise, it is unnecessary to state that 
Japan and Great Britain had more than once entered 
vigorous protests against the Russian demands. 

While the negotiations between Russia and China were 
thus in an unsettled state, Japan and Great Britain con- 
cluded the Anglo-Japanese Alliance on January 30, 1902,°° 
directed mainly against the aggressive designs of Russia 
in the Far East. In face of this determined opposition, 
Russia quickly changed front and concluded the con- 
vention of March 26, 1902,°° pledging to restore the 
Shanhaikwan-Newchang-Sinminting Railway, and to 
complete the evacuation of Manchuria in three succes- 
sive periods of six months each. 

When the specified date for the first stage of evacua- 
tion came, Russia only effected a nominal withdrawal. 
She of course left the parts that she had. pledged to 
evacuate, but she concentrated her withdrawn troops in 
the strategic centers of Manchuria where she was still 
permitted to remain. But when the date for the second 
stage of evacuation came, she not only did not fulfill 
her engagement, but she shortly after presented seven ar- 
ticles as conditions of further evacuation,®’ demanding, 
inter alia, the non-alienation of Manchuria and the clos- 
ing of Manchuria against economic enterprises of any 
other nation except herself. Thereupon Japan, Great 
Britain and the United States again made vigorous pro- 
tests. 


From this point on, Japan stepped into the shoes of 
China and waged a diplomatic duel against Russia, lead- 
ing finally to the Russo-Japanese War of 1904-5. On 
August 12, 1903, Japan presented to Russia six articles, 
as a basis of understanding, among which she demanded 
that the integrity of China and Korea should be mutually 
respected, and that reciprocal recognition of Japan’s pre- 


THE STRUGGLE FOR CONCESSIONS 51 


ponderate influence in Korea and Russia’s special inter- 
ests in Manchuria should be given.®® As _ counter- 
proposals, Russia presented, on October 3, 1903, eight 
articles. She proposed to respect the integrity of Korea, 
but she failed to mention the integrity of China in Man- 
churia, as was demanded in the Japanese proposals, which 
revealed most clearly the true intention of Russia. She 
also proposed that she would recognize Japanese pre- 
ponderating influence in Korea, but in return she asked 
Japan to consider Manchuria as outside her sphere of 
influence. In addition she proposed the creation of a 
neutral zone north of the thirty-ninth parallel.*® 

In answer to the Russian counter-proposals, Japan 
presented to Russia, on October 24, 1903, the irreducible 
minimum. She conceded that Manchuria would be out- 
side of her sphere of influence, and also the creation of 
a neutral zone between Korea and Manchuria, but she 
insisted on the engagement “to respect the independence 
and territorial integrity of the Chinese and Korean em- 
pires.’ °° The Russian note in reply, on December 11, 
1903, virtually reiterated the first counter-proposals of 
Russia except the clauses regarding Manchuria and 
Japan’s right to assist Korea in the latter’s reform,” still 
omitting any mention as to the integrity of China in Man- 
churia. The Japanese reply of December 23, 1903, re- 
emphasized the importance of coming to an amicable 
understanding as to where the interests of the two nations 
conflicted—Korea and Manchuria—and also suggested 
amendments to two counter proposals of Russia, and the 
cancellation of the clause for the establishment of a neu- 
tral zone.“ The Russian reply of January 6, 1904,® still 
omitted any mention as to the integrity of China, but in- 
sisted on the recognition of Manchuria as being outside 
of Japan’s sphere of influence and the establishment of 
a neutral zone. Japan’s last proposal came on January 
13, 1904,°* refusing to agree to the establishment of a 
neutral zone, but conceding Manchuria to be outside 


52. THE DIPLOMATIC HISTORY OF CHINA 


of Japan’s sphere of influence, but this only on condi- 
tion of “an engagement on the part of Russia to respect 
the territorial integrity of China in Manchuria.” To 
this last proposal of Japan Russia made no reply. Diplo- 
matic relations were thereupon severed and war was 
declared by both sides. 


During the war the great problem of China was to 
maintain neutrality. On February 10, 1904, John Hay 
issued a circular note urging the belligerent powers to 
respect the neutrality and administrative integrity of 
China, and to limit their activities within the zone of 
hostility.*>, Later, ‘in 1905,. at. the anstance -or) the 
Kaiser, William II, who feared that the Powers might 
take advantage of the Russo-Japanese War to seize 
China’s territory, John Hay sent out the circular note of 
January 13, 1905,°* requesting that in the final negotia- 
tions between Russia and Japan no claims be made at 
the expense of China’s territorial integrity. 

The war was concluded by the Treaty of Portsmouth, 
September 5, 1905.°7 Russia recognized the paramount 
political, military and economic interests of Japan in 
Korea and pledged not to obstruct any measure of pro- 
tection and control which Japan might take in Korea 
(Art. 2). Russia transferred to Japan, with the consent 
of China, the lease of Port Arthur and Talienwan and the 
southern half of the Russian Railway from Changchun 
to Port Arthur. She ceded the southern half of Saghalien 
Island to Japan. In the additional articles, the with- 
drawal of troops from Manchuria was arranged, and the 
railroad guard was fixed at not more than fifteen per 
kilometer. To secure China’s consent to the transfer 
of the lease of Porth Arthur and Talienwan and the 
southern portion of the Chinese Eastern Railway, Japan 
concluded the Treaty of December 22, 1905, with China,®8 
by which China gave her consent to the transfers made 
by Russia to Japan by the treaty of Portsmouth. In 


THE STRUGGLE FOR CONCESSIONS 33 


the additional agreement of the same date, the conces- 
sion of Antung-Mukden Railway was granted for fifteen 
years (Art. 6) and a number of specified places in 
Manchuria were opened to trade (Art. 1). 

The victory of Japan over Russia was a great inspira- 
tion to the Chinese. It stirred the hearts of the Chinese 
as nothing had done. It convinced them that an Asiatic 
nation, by the adoption of western methods, would be 
capable of defeating a European state. Furthermore, the 
fact that Japan, so much smaller and less endowed by 
nature, and once a disciple of China, should be able to 
rise to such eminence in world politics, drove the Chinese 
to the irresistible conviction that they could likewise 
do the same by following the path of Japan. Thus the 
indirect effect of the Russo-Japanese War was the 
strengthening of Chinese nationalism. 


Shortly after the Russo-Japanese War, the interna- 
tional struggle for concessions was again resumed. As if 
the Boxer Uprising and the Russo-Japanese War had 
temporarily suspended the international rivalry, the new 
struggle soon commenced again after the settlement of 
the spheres of influence between Russia and Japan. Fol- 
lowing the law of historical continuity, the first stage 
of the resumed struggle was to complete the undertakings 
of the concessions acquired in the great scramble of 1898. 
Germany and Great Britain signed, on January 13, 1908,°° 
the Tientsin-Pukow loan agreement, and later, on Sep- 
tember 28, 1910,7° a supplementary loan agreement for 
the same railway. Great Britain signed the Canton- 
Kowlon Railway loan agreement on March 7, 1907," the 
Shanghai-Hangchow-Ningpo Railway loan agreement 
on March 6, 1908,7? the Peking-Hankow Railway re- 
demption loan agreement on October 8, 1908,7° and 
another loan agreement for the same purpose on 
August 1, 1910.74 The Peking Syndicate, however, sur- 
rendered its mining rights in Shansi for a repayment of 


54 THE DIPLOMATIC HISTORY OF CHINA 


Kung Pin taels, 2,700,000, by the agreement of Janu- 
ary 21, 1909)"" 

The new member who became a participant in the 
struggle for concessions by virtue of a successful war 
was Japan. She was comparatively a late comer in this 
contest. By virtue of her brilliant victories she suc- 
ceeded to the southern half of the Chinese Eastern 
Railway from Changchun to Port Arthur by the treaty 
of Portsmouth, September 5, 1905. In addition she now 
contested other railway concessions. For the Hsinmin- | 
ting-Mukden and the Changchun-Kirin Railways, she 
signed successive agreements, first on April 15, 1907,"° 
then a supplementary loan agreement on November 12, 
1908,77 then two detailed agreements on August 18, 
1909,78 one for the Hsinminting-Mukden Railway and 
the other for the Changchun-Kirin Railway. On March 
27, 1907,7° however, Japan transferred the Hsinminting- 
Mukden Railway to the control of China. On August 19, 
1919,8° she also signed the memorandum regarding the 
reconstruction of the Antung-Mukden Railway. 

The United States seemed to be the only power that 
was not quite so successful in the international struggle 
for concessions. She obtained the Canton-Hankow Rail- 
way concession in 1898 after she had failed to secure 
the Peking-Hankow Railway. In the supplementary 
agreement of 1900 it was stipulated that “the object of 
making this supplementary agreement of equal force with 
the original agreement is to permit the benefits being 
transmissible by the American Company to their suc- 
cessors or assigns, but the Americans cannot transfer the 
rights of this agreement to other nations or people of 
other nationalities.” 8 But the American China Develop- 
ment Company which had this concession allowed the 
shares for the Canton-Hankow Railway to fall into 
the hands of the Belgians who soon acquired a con- 
trolling share in the line and began to assume the di- 
rection of the work. Thereupon the Chinese Government 


THE STRUGGLE FOR CONCESSIONS 55 


protested. Finally the concession was cancelled on Au- 
eust 29, 1905,8* by the payment of $6,750,000 gold, which 
the Chinese Government borrowed from the Hongkong 
Colonial Government on September 9, 1905.8 

Having completed the agreements for the concessions 
they had obtained in the past, they now entered into a 
contest over the other railway concessions which had 
as yet not been appropriated. The struggle of this sec- 
ond stage centered around the trunk line running from 
Hankow westward to Szechuan and southward to Can- 
ton,—commonly known as the Hukuang Railway. In 
securing the loan from the Hongkong Colonial Gov- 
ernment for the redemption of the Hankow-Canton Rail- 
way concession, Viceroy Chang Chi-tung, in his letter of 
September 9, 1905, to the British Consul at Hankow, Mr. 
E. H. Fraser,®* promised to give Great Britain the first 
option on the future loan for the Canton-Hankow Rail- 
way, and so in 1909 when the construction of the railway 
was decided upon, Chang Chi-tung approached the British 
and Chinese Corporation for a loan. During the nego- 
tiation, the British insisted on the Canton-Kowloon terms, 
while Viceroy Chang Chi-tung insisted on the Tientsin- 
Pukow terms which were much more favorable. As the 
British would not accept the Tientsin-Pukow terms, 
Chang Chi-tung broke off the negotiations and turned 
to a German syndicate and succeeded in signing a loan 
agreement. Thereupon the British charged him with 
breach of faith and claimed that the option was offered, 
not to any one British syndicate, but rather to the na- 
tion as a whole. On the other hand, Chang Chi-tung 
retorted that since the British and Chinese Corpora- 
tion which represented the British Railway enterprises 
in China would not take the concession at Tientsin- 
Pukow terms, he was no more bound by the original 
pledge, but was free to offer the concession to syndi- 
cates of other nationalities. Accusations and recrimina- 
tions ensued. Finally the controversy was settled at the 


56 THE DIPLOMATIC HISTORY OF CHINA 


Berlin conference of bankers when the British capi- 
talists agreed to combine with the French and the Ger- 
mans and to extend the concession so as to include the 
Hankow-Szechuan Railway. It was agreed that the 
French and the English should construct the Hankow- 
Canton line under a British engineer, while the Germans 
should construct the Hupeh section of the Hankow- 
Szechuan line. The preliminary agreement with China 
was signed on June 6, 1909,°° for a loan of £5,500,000 
on Tientsin-Pukow terms. 

Four days after the conclusion of the preliminary 
agreement, the United States protested. She claimed 
that an American Syndicate had been granted the right 
of participation in the Hankow-Szechuan line together 
with the British, basing her claim on the letter from 
the Chinese Foreign Office to Minister Conger dated 
August 15, 1903,8* and also the letter of Prince Ching 
to Minister Conger dated July 18, 1904.87 Recalling, 
however, the experience with the American China De- 
velopment Company in connection with the Hankow- 
Canton concession, Chang Chi-tung refused to admit 
American interests. Finally a personal.cable from Presi- 
dent Taft to the Prince Regent of China, on July 15, 
1909,°§ changed the attitude of the Chinese Government 
and brought American interests into line with the four- 
Power group. On May 23, 1910, the four Powers en- 
tered into an agreement at a conference of the represen- 
tatives at Paris,*® by which the loan was increased from 
£5,500,000 to £6,000,000 to be shared equally by the four 
Powers. ‘Their final agreement with China was signed 
on May 20, 1911.°*° 


The resumption of the international struggle for con- 
cessions, as manifested in the Hukuang loan, could not 
but produce corresponding reactions. That on the part 
of the United States was the neutralization plan of Sec- 
retary Knox. Having secured the Chinchow Aigun con- 


THE STRUGGLE FOR CONCESSIONS 57 


cession,®! he proposed to the powers in 1909 *? the neu- 
 tralization of all the Manchurian railways. According to 
his plan, China was to secure a large international loan 
from the powers and redeem the Chinese Eastern Rail- 
way and the South Manchurian Railway. Thus all the 
railways in Manchuria would henceforth belong to China, 
but the supervision thereof would be shared or con- 
trolled by the Powers concerned. In other words, this 
neutralization plan was a concrete assertion and appli- 
cation of the open door doctrine in relation to the rail- 
ways of Manchuria. It aimed to secure the equal oppor- 
tunity of trade by the establishment of an international 
syndicate which would supervise the railways, not for 
the sake of any single nation, but for the sake of all 
nations. It further aimed to preserve the integrity of 
China by vesting the property rights of the railways in 
the Chinese Government. China and Great Britain re- 
ceived the proposal with favor, but Russia and Japan 
rejected it. Thus failed the Knox plan of neutralization. 

The reaction from China, as provoked by the resump- 
tion of the international struggle for concessions, was the 
Chinese Revolution of 1911. The Chinese spirit of 
nationalism having been stirred to its depths by the Japa- 
nese victory over Russia in 1905, the people could not 
endure any longer these international struggles at their 
expense. Taking lessons from the painful experience of 
the Boxer Uprising in 1900, when blinded fury led 
them to the fanatical attempt to expel all foreigners, this 
time they wisely turned their resentment on the true 
source of their weakness, the Manchu Dynasty. Realiz- 
ing that Japan had forged her way to the forefront 
through the establishment of a strong and efficient gov- 
ernment, they also believed that, by taking the reins of 
their government from the feeble hands of the Manchus, 
they could erect a government of their own, which would 
shelter them henceforth from the onslaughts of the 
West. 


58 THE DIPLOMATIC HISTORY OF CHINA 


With this deep conviction they waited for the mo- 
ment to strike. When the resumption of the interna- 
tional struggle for concessions manifested itself again 
in the Hukuang Loan negotiations, the people with their 
newly aroused nationalism were determined to put a 
stop to this spoliation of their sovereign rights and mort- 
gage of their heritage. The gentries of the provinces 
affected—Hupeh, Hunan, and Szechuan—made the coun- 
ter move and started a campaign for the construction 
of the Hukuang railways by the people themselves. To 
this end they raised large sums of capital and actually 
commenced to construct the lines. The conclusion of 
the Hukuang loan in 1911, however, dashed to pieces 
their hopes and efforts, and imperiled their investment 
in the railways. The explosion of a bomb in Wuchang 
on October 10, 1911, brought the situation to a head 
and heralded the advent of the Chinese Revolution, which 
resulted in the overthrow of the Manchu Dynasty and 
the establishment of the Chinese Republic. 


In recapitulation, we may say that this period was one 
of international struggle for concessions. The first great 
scramble took place in 1898 and the second in 1908- 
1911. In the interval between the two acts of the strug- 
gle was the conflict between Russia and Japan in 1904- 
1905 over the integrity of China in Manchuria and 
the definition of their respective spheres of influence. 
The reaction on the part of the United States to the 
first general scramble was the enunciation of the Open 
Door Doctrine in 1899 and 1900, and to the second 
struggle in 1908-1911 was the Knox neutralization plan. 
The reaction on the part of the Chinese to the first 
scramble of 1898 was the fanatical Boxer Uprising and 
to the second act of the international struggle, the Chinese 
Revolution of 1911. During this period we may also say 
that the driving factor back of this international strug- 
gle for concessions was the national greed of the Powers 


THE STRUGGLE FOR CONCESSIONS 59 


and the dynamic force of the European balance of power. 

We may further state that this period witnessed the 
beginning of the foreign loans, that put China on the 
broad and dangerous road, which, unless checked early by 
popular control, would inevitably lead China to the preci- 
pice of bankruptcy and foreign control. We may also 
add that this period witnessed the deepest humiliation 
and greatest peril that China had ever undergone. As 
to how this darkest period of Chinese diplomatic his- 
tory was gradually changed into a period on the whole 
more favorable and yet in some respects more critical, 
it will be seen in the next chapter.® 


NOTES TO CHAPTER, IIT 


1, MacMurray, Treaties and Agreements with and concern- 
ing China, 1895/6; cf. F. H. Huang, Public Debts in China, p. 21. 

2. F. H. Huang, ibid., pp. 22-23. 

3. Hertslet’s China Treaties, Vol. I, No. 52, pp. 321-323. 

4. Ibid., No. 22, pp. 113-119. 

5. Art. 2, ibid., p. 324. 

6. Art. 3, ibid., p. 324. 

Patt. 5: ibid., p. 326. 

 rirt..5, ibid., p. 326. 

9. MacMurray, op. cit., 1896/5. 

10. Hertslet, op. cit., No. 59, pp. 350-354; also Shantung ques- 
ae published by The Chinese National Welfare Society, 1920, 


11. Hertslet, op. cit., No. 88, pp. 505-508. 
12. Ibid., No. 89, pp. 508-509. 

it Ibid., No. 54, pp. 327-328. 

14, Ibid., No. 55, pp. 329-331. 

hee abid,, No; 22, p. 113. 

16. Ibid., No. 22, pp. 113-119. 

17. Ibid., No. 24, pp. 120-122. 

18. Ibid., No. 25, pp. 122-123. 

19. Ibid., No. 25, p. 122. 

au Ibid., p. 122. 

24 & MacMurray, 1898/2. 

22. MacMurray, 1897/2; also Doc. Dip. Chine, 1894-8, p. 33. 
23, MacMurray, 1898/6; Doc. Dip. Chine, 1894-8, p. 49, 

24. MacMurray, 1898/1. 

25. MacMurray, 1898/8. 

26. Shantung question, op. cit., p. 28. 


60 THE DIPLOMATIC HISTORY OF CHINA 


27. MacMurray, 1915/7. 

28. MacMurray, 1898/13. 

29. MacMurray, 1898/20. 

30. MacMurray, 1903/2. 

31. MacMurray, 1908/2. 

32. MacMurray, 1898/12. 

33. M. C. Hsu, Railway Problems in China, pp. 41-44; Sir 
MacDonald to Lord Charies Beresford, British Blue Book, Af- 
fairs of China, No. 1, 1899, pp. 344-347. 

34. Rockhill, Dp. 25) Art. 4/7. 

oo MacMurray, 1902/8. 

36. Hsu, op. cit., p. 40; Sir MacDonald to Lord Charles 
Beresford, British Blue Book, Affairs of China, No. 1, 1899, pp. 
344-347, 

37. U.S. For. Rel., 1899, pp. 128-143. 

38. U. S. For. Rel., 1899, pp. 141-142, Count Mouravieff to 
Tower. 

39. U.S. For. Rel., 1900, p. 299. 

40. State papers, Vol. 94, p. 686 et seq.; U. S. For. Rel., 1901, 
Appendix, Affairs in China, French text, pp. 306-312, English 
text, 312-318. 

41. Hertslet, No. 27, pp. 148-170. 

42. Hertslet, No. 28, pp. 171-188. 

43A. Hertslet, No. 66, pp. 383-391. 

43B. Art. 8, Sec. 14, Hertslet, No. 28, p. 180. 

44, Hertslet, No. 100, pp. 566-578. 

45. W. W. Willouby, For. Rights and Interests in China, Ap- 
pendix, p. 572. 

46. MacMurray, 1907/3. 

47. Asakawa, Russo-Japanese Conflict, p. 151; China, No. 1, 
1901, No. 256. 

48, Ibid., p. 152; China, No. 1 (1901), p. 113, No. 256. 

49. Morse, The peer Relations of the Chinese Em- 
pire, Vol. 3, p. 305; U. S. For. Rel., 1901, Appendix, p. 19. 

50. Asakawa, Op. ea pp. 166- 167: China, No. 2, 1904, No. 5, 
Jan. 4, 1901. 
wo yg bite p. 169; China, No. 2, 1904, No. 8; No. 13; No. 12; 

oO. 

52. Ibid., p. 174; The Times, Seiten ps ay 1901, p. 5; Ghina 
No. 2, 1904, Ne 6, No. 14, Nos. 25 and 4 

Ce Sey site beak pon he) © al bho For. Rel., 1902, p a 273-274, 

5407.5, Ber Rel., 1902, p. 275. 

55. State papers, Vol. 95, pp. 83-84. 

56. Hertslet, No. 90, pp. 509-512. 

57, Asakawa, op. cit., pp. 242-244; China, No. 2, 1904; No. 94. 

58. Ibid., pp. 303- 304, 

59. Ibid., pp. 308-309. 

60. Tbid., pp. 324-325. 

61. Ibid., pp. 328-329. 

62. Ibid., pp. 330-331. 

Go. Bid) ip doo. 


THE STRUGGLE FOR CONCESSIONS 61 


64. Ibid., pp. 337-339. 

65. U. S. For. Rel., 1904, p. 118. 

66. U.S. For. Rel., 1905, peat 

67. State Papers, Vol. 98, pp. 735-740; MacMurray, 1905/8. 
68. Hertslet, No. 67, pp. 301-396. 

69. MacMurray, 1908/1. 

70. MacMurray, 1910/4. 

71. MacMurray, 1907/2. 

72. MacMurray, 1908/3. 

73. MacMurray, 1908/13. 

74. MacMurray, 1908/13. 

75. MacMurray, 1909/2. 

76. MacMurray, 1907/3. 

77. MacMurray, 1908/18. 

78. MacMurray, 1909/6, 1909/7. 

79. MacMurray, 1907/5. 

80. MacMurray, 1909/8. 

81. The Canton-Hankow Railway Contracts, Irving Press, N. 
et 1. Huang, p. 32. 

82. MacMurray, 1905/7. 

83. MacMurray, 1905/9. 

84. MacMurray, 1905/9. 

85. MacMurray, 1911/5. 

86. U. S. For. Rel., 1909, pp. 155-157; MacMurray, 1911/5. 
87. MacMurray, 1911/5. 

88. U.S. For. Rel., 1909, pp. 178-180. 

89. U. S. For. Rel., 1910, p. 280. 

90. MacMurray, 1911/5. 

91. MacMurray, 1909/12. 

92. U.S. For. Rel., 1910, p. 234 et seq. 

93. During this period four more states entered into treaty 
relations with China—Congo Free State, 1898; Korea, 1899; 
Mexico, 1899; Sweden, 1908. 


IV 


THE INTERNATIONAL COOPERATION AND 
CONTROL (1911——) 


Tue fourth and present period of the diplomatic his- 
tory of China extends from the close of the Chinese 
Revolution. It is a period in which a radical change of 
policy on the part of the Powers took place. While in 
the preceding period the international struggle for con- 
cessions was the policy of the Powers, in this period the 
policy of international codperation and control is the 
predominant note. 

This radical change was due to several vital reasons. 
The first was the unavoidable disadvantage of interna- 
tional cut-throat competition. It is well known in eco- 
nomic science that such competition leads inevitably to 
either mutual destruction or combination and coopera- 
tion. So likewise in the field of international politics, 
the same law holds true. International cut-throat com- 
petition must inevitably result either in mutual destruc- 
tion of one another’s ends or in international combina- 
tion and cooperation. For instance, as we have seen, in 
the case of the Peking-Hankow railway, the British, the 
American and the Belgian capitalists were all competi- 
tors, among whom the British were especially anxious to 
win the premier concession, passing as it does from the 
capital of China to the heart of the Yangtze Valley; but 
the Belgian capitalists, supported by Russia and France, 
underbid the other and won the concession. Again, in 
the case of the Hankow-Canton railway, the British 
capitalists, although holding a prior option by virtue of 
the pledge of Viceroy Chang Chi-tung, were defeated by 
German capitalists who were willing to accept the con- 

62: 


COOPERATION AND CONTROL 63 


cession on the Tientsin-Pukow terms which the British 
had rejected. It was because of the painful experience 
of this sort that the Powers began to realize the inex- 
pediency of international competition and favored the 
policy of international combination and cooperation. 

In addition, there was another cause for the radical 
change of the policy of the Powers in China, and that 
was the possible occurrence of the foreign control of 
China’s finance. In the preceding period there were a 
few foreign loans made for the immediate payment of 
the war indemnity to Japan, but there were practically 
no loans made that were of an administrative character, 
most of the loans being largely for railway construction 
and other commercial purposes. But with the advent 
of the Republic, and the falling off of provincial reve- 
nues, which either were diverted to provincial uses or 
failed to reach Peking on account of the relatively inde- 
pendent position of the military governors in control of the 
provinces, the Peking Government was forced to resort 
to administrative loans for the purpose of meeting ordi- 
nary non-productive needs of the government. With the 
coming of administrative loans, there loomed the ghastly 
apparition of possible and probable bankruptcy, and 
hence there arose the possible eventuality of foreign con- 
trol of China’s finance. As no one power would allow 
any other single power to have the exclusive control of 
her finances, the Powers were compelled to reach the 
conclusion that they must combine and cooperate, so 
that, in case there should be any foreign control of China’s 
finance, it would be an international control rather than 
the control by any single Power. 

Toward the close of the preceding period, there were 
a few instances of international combination and codpera- 
tion, but on the whole they were not the results of de- 
liberate choice, but rather the consequences of inevitable 
circumstances. For instance, the Hukuang railway loan 
was equally shared by the four Powers—Great Britain, 


64 THE DIPLOMATIC HISTORY OF CHINA 


the United States, France and Germany—not because 
they were willing to pool their interests, but rather be- 
cause the German capitalists had underbid the British and 
obtained the Hukuang railway concession, and there was 
no other solution of the tangled situation than the 
common sharing of the concession, which was effected 
by the Berlin Conference of Bankers; and the United 
States was not granted participation until President Taft 
threw his whole personal weight of influence into the 
diplomatic controversy by cabling a personal despatch 
to the Prince Regent of China. Thus this notable in- 
stance of international combination and codperation was 
an outcome to which the Powers were driven, relunct- 
antly but inevitably, by the force of circumstances. 

A real instance, however, of international combination 
and cooperation, commencing at the close of the pre- 
ceding period and extending nevertheless into this period, 
was the currency reform and Manchuria industrial de- 
velopment loan. The loan was initiated by the Chinese 
Government and first offered to the American Banking 
Group. The preliminary agreement for a loan of $50, 
000,000 was signed by this Group on October 27, 
1910.1 But the United States Government deemed that 
such a gigantic undertaking as the currency reform and 
the Manchurian industrial development would need the 
sympathetic cooperation of the Powers and should be 
shared by all of them alike. So out of good will it ex- 
tended an invitation to the other Powers to join in the 
loan. As a consequence, France, Germany, Great Britain ~ 
and the United States, through their respective financial 
agencies, signed the agreement on April 15, 1921? for 
a loan of £10,000,000.. On account of the Revolution of 
1911, however, the loan was not floated, although an 
advance of sterling treasury bills amounting to the value 
of Shanghai taels 3,100,000 was delivered for the urgent 
needs of the Chinese Government on March 9, 1912.3 

Thus at the opening of the present period, through the 


COOPERATION AND CONTROL 65 


experiences derived from the Hukuang Railway loan and 
_ the currency reform and Manchurian industrial develop- 
ment loan, the powers had already learned the lesson of 
the advantages of international combination and coopera- 
tion and were therefore quite ready to try this new policy. 
And the instrument through which the policy was to be 
put into effect was the quadruple syndicate or the old 
consortium, consisting of the banking groups of Great 
Britain, France, the United States and Germany, which 
was a direct product of the Hukuang and the currency 
loans. To this quadruple consortium were later added 
Russia and Japan. The working agreement of the 
sextuple group was signed on June 18, 1912,4 at the 
Interbank Conference of Paris, setting forth the prin- 
ciple of equal participation on the basis of complete 
equality. 


The first subject the consortium was to deal with was 
the reorganization loan of £25,000,000. Shortly after his 
assumption of office, Yuan Shih-Kai, then Provisional 
President of China, commenced the negotiation for the 
loan. On making a request for a preliminary advance of 
10,000,000 taels for administrative purposes, he had 
promised the original quadruple group that he would 
give first option to the group for the reorganization loan, 
provided their terms were as advantageous as those of 
the other banking groups. But when the negotiations 
started, it was soon found that the terms were too oner- 
ous. Pressed by immediate needs, a small Belgian loan 
of £1,000,000 was concluded on March 14, 1912, for 
which service preference for future loans was pledged. 
The conclusion of this loan called forth a stormy pro- 
test from the quadruple group. As a consequence, the 
loan was canceled. Thereupon the negotiation for the 
reorganization loan was resumed, and meanwhile, as we 
have seen, Japan and Russia were admitted to the con- 
sortium, 


66 THE DIPLOMATIC HISTORY OF CHINA 


During the negotiation, it was soon discovered that 
the Powers concerned aimed to secure the supervision of 
China’s finance.© To this China vigorously declined to 
accede. Later, as a result of the conference of the bank- 
ing groups at London, May 17-24, the Powers demanded 
the right to manage the loan funds for five years, the 
foreign supervision of salt gabelle, the right to appoint 
a foreign representative to be president of the auditing 
bureau and to appoint a financial adviser to the Chinese 
Government.’ To these proposals the Chinese Govern- 
ment again refused to give its assent. A deadlock thus 
ensued. 

Pressed once more by urgent needs, China again turned 
to other sources for temporary relief. This time she 
concluded, on August 30, 1912, with an independent 
British Syndicate (C. Birch Crisp & Co.) ® for a loan of 
£10,000,000, for which preference was again given for 
future loans, provided the terms were equally advan- 
tageous as those otherwise obtainable. The conclusion 
of this loan, commonly called the Crisp Loan, once more 
called forth the protest of the Powers, in consequence of 
which the privilege of preference was withdrawn and 
the issue of the second half of the loan was canceled at 
a compensation of £150,000.°4 

Thereafter negotiation were again resumed. By the 
end of January, 1913, the agreement was ready for 
signature. At this juncture, France and Russia made 
objections to the appointment of foreign advisers sug- 
gested by China. A shameless wrangle ensued. The 
controversy was finally settled by the agreement to have 
a Britisher as Inspector of the Salt Administration, a 
German as director of the National Loan Department, 
and two advisers, one French and the other Russian, for 
the Auditing Bureau. 

During the time when the Powers were scrambling 
over the appointments of advisers, President Wilson, 
conscious of the precarious nature of the reorganization 


COOPERATION AND CONTROL 67 


loan, withdrew the support of the United States Gov- 
ernment from the American banking group, and issued a 
proclamation on March 18, 1913, announcing that as 
the terms of the reorganization loan touched the adminis- 
trative integrity of China, the United States could not 
become a party thereto.°® Consequently, the American 
group withdrew from the Sextuple Consortium. 

The final agreement was signed on April 26, 1913.7° 
The amount of the loan was to be £25,000,000 (Art. 1). 
The security was to be the Chinese Salt Administration 
(Art. 4), which was to be reorganized under foreign 
supervision (Art. 5). The rate of interest was to be 
five percent (Art. 8). The life of the loan was to be 
forty-seven years (Art. 9). Redemption after a lapse 
of seventeen years and up to the end of the thirty-second 
year was to be at a premium of two and one-half per- 
cent, but after the thirty-second year extra redemption 
could be made without premium (Art. 9). In reim- 
bursement of expenses connected with the payment of 
interest, and with the repayment of the principal of the 
loan, a commission of one-fourth of one percent was to 
be paid to the banks. For the flotation of the loan a 
commission of six percent of the nominal value was to 
be granted. The issue price was to be not less than 
ninety percent (Art. 13), securing to China a net price 
of not less than eighty-four percent. China was to estab- 
lish an account and audit department (Art. 14). 

After the conclusion of the reorganization loan of 
1913, the policy of international combination and coépera- 
tion came to a standstill. This was due to two main 
causes. The first was the withdrawal of the United 
States which inaugurated this policy during the nego- 
tiation of the currency loan and was its real champion. 
With the absence of the United States there was no 
moral leader among the Powers who could uphold the 
doctrine of equal opportunity of trade and the integrity 
of China. As a result, the other Powers fell into their 


68 THE DIPLOMATIC HISTORY OF CHINA 


old practice of international struggle for concessions. 
The other reason, which came later, was the Great War 
in Europe. That drew away the contending Powers from 
the concession scramble in China to the battlefields of 
Europe. The policy of international combination and 
cooperation was therefore suspended until the close of 
the Great War, when the Powers instituted the New 
International Banking Consortum and came back to China 
with the former policy of international combination and 
cooperation. 

As we have seen, the withdrawal of the United States 
left the other Powers without a moral leader, and with- 
out an earnest champion of the policy of international 
combination and cooperation. As we have also seen, the 
consequence of the withdrawal was the falling off of 
the Powers into the old practice of international strug- 
gle for concessions. In pursuance of this old policy of 
competition, which brought on the Boxer Uprising of 
1900 and the Chinese Revolution of 1911, the Powers 
again contended for concessions. On September 24, 1912, 
the Belgian Company, Compagnie Générale de Chemins 
de Fer et de Tramways en Chine, secured the concession 
of the Lung-Tsing-U-Hai Railway.1?, On December 12, 
1912, the supplementary clause was signed,** and on May 
1, 1920, another subsequent agreement for the loan was 
entered at Brussels.14 On July 22, 1913, Belgium and 
France, through their respective financial agencies, 
jointly obtained the concession of the Tatung-Chengtu 
line.*® France procured, besides the five percent indus- 
trial gold loan of 1914,** the contract for the Ching-Yu 
Railway on January 21, 1914,17 and the pledge of the 
Chinese Foreign Office regarding preference to French 
nationals in railway and mining enterprises in Kwangsi 
Province.*® Germany acquired, by an exchange of notes, 
on December 31, 1913,*° the right of extending the Shan- 
tung Railway from Kaomi to Hanchuang and from 
Tsinan to Shunteh.?° 


COOPERATION AND CONTROL 69 


Following the general scramble, Great Britain obtained 
-on November 14, 1913,71 the contract for the Pukow-Sin- 
yang Railway; on December 18, 1913, the preliminary 
agreement for the Shasi-Shingyi Railway, and on July 
25, 1914, the final agreement for the same.?* On March 
31, 1914, she also obtained the Nanking-Hunan Railway 
agreement,** and on August 24, 1914, the Nanchang- 
Chaochow concession.2> The United States financial 
agents also obtained concessions. The American Inter- 
national Corporation secured, on May 13, 1916,?° the 
agreement for the Huai River Conservancy Grand Canal 
Improvement Loan agreement.?7 The Siems and Carey 
Company obtained, on May 17, 1916,?8 the concession 
to construct 1,500 miles of railways in China, which was 
later reduced by the supplementary agreement of Sep- 
tember 29, 1916, to an aggregate of 1,100 miles. 

Likewise, Japan wrested many valuable concessions 
from China. By an exchange of notes, on October 5, 
1913,?° she secured the concession from Supingkai via 
Chengchiatun to Taonanfu, from Kaiyuan to Hailung- 
cheng, from Changchun to Taonanfu. By the treaty of 
1915 relating to the Province of Shantung, she also pro- 
cured the right to construct a railway from Chefoo or 
Lungkow to a point on the Kiaochau-Tsinan Railway. 
The Japan Advertiser of October 2, 1918, announced ad- 
ditional railway loans in Manchuria and Mongolia,— 
from Taonan to Jehol, from Kirin to Haiyuen via Hai- 
lung, from a point on the Taonan-Jehol Railway to a 
seaport, and the railway loans in Shantung,—the Tsinan- 
Shunteh and the Kaomi-Hsuchow *! concluded on Sep- 
tember 24, 1918. Under the Terauchi Cabinet there were 
also concluded with China the Communication Bank 
Loan, the Telegraph Loan,** the Kirin-Hueining Rail- 
way Loan,** and the loan of yen, 30,000,000, with all the 
forests and gold mines in both Kirin and Heilungkiang 
provinces for security.*® 

Russia was the only great Power during this period 


70 THE DIPLOMATIC HISTORY OF CHINA 


that was not so much interested in the international strug- 
gle for concessions. What railway concession her finan- 
cial institutions gained in this period was the Pin-Hei 
Railway acquired by the Russo-Asiatic Bank on March 
27, 1916.%° The interest of Russia rather lay in Mon- 
golia. Excepting the treaty of December 20, 1911,°7 fix- 
ing the boundary between Russia and China from Tar- 
baga Dagh to Abahaitu, and along the Argun River to 
its confluence with the Amur River and the protocol of 
delimitation along the river Horgos, May 30-June 12, 
1915, the successive treaties she made with China dur- 
ing this period were concerning Mongolia. On Novem- 
ber 3, 1912,?8 she concluded a convention with Mongolia 
pledging to assist the latter in maintaining its régime of 
autonomy and prohibiting the admission of Chinese troops 
or the colonization of the land by the Chinese. A year 
later, on November 5, 1913, she concluded a convention 
with China,*® exacting the recognition of the autonomy of 
Outer Mongolia, and the pledge not to interfere in the 
internal administration of Outer Mongolia, nor to send 
troops thereto, nor to colonize the territory. Subse- 
quently, on September 30, 1914, Russia again entered 
into an agreement *° with Outer Mongolia, binding the 
latter to consult Russia in the grant of railway conces- 
sions to other nations. To complete the settlement of 
the relationship between Russia, Outer Mongolia and 
China, the tripartite agreement was concluded on June 
7, 1915.44, Outer Mongolia recognized the Sino-Russian 
Convention of November 5, 1913 (Art. 1). “Outer Mon- 
golia recognizes China’s suzerainty, China and Russia 
recognize the autonomy of Outer Mongolia forming part 
of Chinese territory” (Art. 2). “Autonomous Mongolia 
has no right to conclude international treaties with for- 
eign powers respecting political and territorial questions 
(Art. 3). As regards questions of a political and terri- 
torial nature in Outer Mongolia, the Chinese Govern- 
ment was obligated to come to an agreement with the 


COOPERATION AND CONTROL 71 


Russian Government through negotiations, in which the 
authorities of Outer Mongolia should have the right of 
participation (Art. 3). 


Thus the international struggle for concessions was re- 
vived after the withdrawal of the United States. When, 
however, the World War broke out, the struggle came 
to an end. Retiring from the arena of Far Eastern polli- 
tics, the Powers turned their full attention to the death 
struggle in Europe, thereby relieving China temporarily 
from the aggressions of Europe. 

This short moment of alleviation, however, was not 
to last long. Left alone and untrammeled in the Far 
East, and with China lying unprotected and almost help- 
less before her, Japan took advantage of the situation. 
She realized that the opportunity of a thousand years had 
come and that she must strike while the iron was hot. 
Therefore, on the pretense of the Anglo-Japanese Al- 
liance, she entered the war on the side of the Allies. 
On August 15, 1914, she presented an ultimatum to Ger- 
many, advising the latter to withdraw immediately all 
armed vessels from Chinese and Japanese waters, and 
to deliver to herself the leased territory of Kiaochow, 
not later than September 15, “with a view to the eventual 
restoration of the same to China,” ** and also asking for 
an unconditional acceptance of the advice by noon of 
August 23, 1914. Failing to receive a reply at the speci- 
fied time, she declared war on Germany on August 23, 
1914. 

Thereupon she despatched her forces to capture Kiao- 
chow. On September 3, to the surprise and indignation 
of the Chinese, she landed her troops at Lungkow on the 
northern shore of the Shantung Peninsula, about 150 
miles from Kiaochow, while the British forces, codperat- 
ing in the campaign, landed on September 23 at Laoshan 
within the German leasehold. Confronted by the evident 
violation of her neutrality and yet unwilling to come to 


72 THE DIPLOMATIC HISTORY OF CHINA 


a conflict with Japan, China, on the day of Japan’s land- 
ing at Lunkow, proclaimed a war zone covering the east- 
ern part of Shantung Peninsula as far west as Weihsien, 
and obligating the belligerents to observe the bounds thus 
set and not to encroach westward. 

But, unexpectedly, on October 6, the Japanese soldiers, 
despite the protest of the Chinese Government, went to 
Tsinan and seized the railway station there. Having oc- 
cupied the entire length of the railway from Tsingtao to 
Tsinan, the Japanese distributed soldiers along the rail- 
road and thus gradually displaced all the Chinese em- 
ployees of the railway. They also seized the mining 
properties of the Germans along the railway and operated 
them for their own benefit. 

During this time the siege of Tsingtao continued, until 
September 7, when the Germans surrendered the city. 
As the capture was completed, and it seemed that there 
was no more necessity for the Japanese troops to remain 
in Shantung, the Chinese Government asked the Japanese 
to withdraw from the Province and concentrate their 
forces at Kiaochow. This the Japanese refused to do. 
As a next step, and seeing that the exigency which called 
forth the proclamation prescribing the war zone had 
passed, the Chinese Government abrogated the declara- 
tion and duly notified the British and Japanese on Janu- 
ary 7, 1915, to that effect. To this note the Japanese 
Minister replied that the revocation of the war zone was 
an indication of want of international faith and of un- 
friendliness, and that the Japanese troops in Shantung 
would not be bound thereby. 


When diplomatic relations were thus in such a difficult 
pass, the Japanese Minister, to the dismay of the Chinese 
Government, presented on January 18, 1915, the now fa- 
mous Tiwenty-one Demands, divided into five groups. 
The first group related to Shantung. Japan was to have a 
railway concession from Chefoo or Lungkow to join the 


COOPERATION AND CONTROL 73 


Kiaochow-Tsinan Railway, the opening by China of cer- 
tain commercial ports in the province, the pledge by 
China of the non-alienation of the coast or territory of 
Shantung, and, above all, the assent of China to any ar- 
rangement Japan might make with Germany at the end 
of the war relating to the German rights in Shantung.* 
The second group dealt with South Manchuria and East- 
ern Inner Mongolia. Japan demanded the extension to 
ninety-nine years of the lease of Port Arthur and Dalny, 
and the South Manchuria Railway and the Antung-Muk- 
den Railway; the right to lease and own land and to 
open mines and to engage in any business, manufacturing 
and farming; the requirement of the consent of the Jap- 
anese Government to the pledging of the local taxes as 
securities for any railway concession to a third Power 
and to the employment of foreign advisers; and the 
transfer to Japan of the management and control of the 
Kirin-Changchun Railway for ninety-nine years.** The 
third group referred to the Hanyehping Company. Japan 
demanded joint partnership in the company and the 
monopoly by the said company of the mines located in 
the neighborhood of those owned by the company.*® The 
fourth group treated of the non-alienation of the coast 
of China.*® The fifth group, which was the climax, de- 
manded the employment of influential Japanese advis- 
ers; the right to own land by the Japanese hospitals, 
churches and schools in the interior of China; the joint 
administration by Japanese and Chinese of the police at 
important places in China ; the purchase of a fixed amount 
of ammunition from Japan (say, fifty percent or more), 
or the joint establishment of an arsenal in China; rail- 
way concessions from Wuchang to Kiuchang and Nan- 
chang, from Nanchang to Hangchow, and from Nan- 
chang to Chaochou; the exclusive right of the economic 
development of Fukien; and the right of Japanese mis- 
sionary propaganda in China. 

The negotiations that ensued are known to the world,— 


74. THE DIPLOMATIC HISTORY OF CHINA 


how the Japanese first tried to conceal the demands and 
forced the Chinese Government to an immediate accept- 
ance in secrecy; how later, as the news of the demands 
leaked out, the Japanese denied their existence and pre- 
sented to the world only eleven articles, omitting the most 
important, including Group V.** As negotiations lagged, 
on April 26, 1915, Japan presented her revised demands in 
Twenty-four Articles. In the first group, relating to 
Shantung, there was practically no change except the 
demand of its non-alienation, which was changed to an 
exchange of notes.*® In the second group respecting 
South Manchuria and Eastern Inner Mongolia, the two 
regions, which had been treated alike in the original de- 
mands, were now differentiated. In South Manchuria, 
all the rights and concessions, as demanded originally, 
were still pressed, except the right of land ownership, 
which was omitted, and the right of inland travel and 
residence which was regulated by the existing and pre- 
vailing rules of extraterritorial jurisdiction in China. In 
other words, subject to certain limitations, all of South 
Manchuria was to be opened to the Japanese. In East- 
ern Inner Mongolia, whose status was originally placed 
on a par with South Manchuria, only an exclusive sphere 
of Japanese influence was now demanded. The granting 
of railway concessions and the pledging of local taxes 
as securities still required the consent of Japan, and the 
opening of certain commercial ports to the residence and 
trade of Japanese with the privilege of agricultural and 
industrial pursuits was still demanded.*® In the third 
group dealing with the Hanyehping Company, the joint 
partnership was still demanded, but the demand for the 
monopoly of the mines in the neighborhood of those 
owned by the company was abandoned; but the limita- 
tions of non-conversion into a State enterprise or of con- 
fiscation and the prohibition of the use of any other for- 
eign capital than the Japanese were added.®° The fourth 
group treating of the non-alienation of China’s coast was 


- 


COOPERATION AND CONTROL i 


changed to a voluntary pronouncement on the part of 
‘the Chinese Government. 

In the fifth group respecting the political, military and 
financial control of China, all the previous demands, in 
one form or another, were still pressed with certain ex- 
ceptions. The one on the joint administration of police 
in important places of China was dropped. The one on 
the right of land owning by the Japanese for the pur- 
pose of establishing hospitals, schools and churches was 
modified to the extent that the right of land-owning was 
changed to the right to purchase and lease land, and 
that the right to esablish churches in the interior of 
China was omitted. The one on the railway concessions 
in the Yangtze Valley was modified only by the self- 
denying limitation that there should be no objection from 
the Power interested in these concessions, meaning, of 
course, Great Britain, and by the prohibition not to grant 
these concessions by China to any foreign Power, “before 
Japan comes to an understanding with the other Power 
which is heretofore interested therein.” The one on Fu- 
kien was changed from a demand for an exclusive Japan- 
ese sphere of interest to a prohibition of the construc- 
tion by any foreign Power of any naval and military 
base, and the use of foreign capital for the construction 
of the same. All the other demands such as the pur- 
chase of arms or the establishment of joint arsenals, the 
employment of Japanese advisers, the right of Japanese 
missionary propaganda, as we have seen, were pressed in 
one form or another as before.** 

In spite of revision, no agreement, however, could be 
reached to the satisfaction of both sides. On May 7, 1915, 
the Japanese presented an ultimatum demanding a sat- 
isfactory reply within two days. All the articles in groups 
1, 2, 3, 4 and the article on Fukien in Group V of the re- 
vised demands were pressed. Group V excluding, as 
we have seen, the clause on Fukien, was detached and 
postponed for future negotiotion. ‘So, in spite of the 


76 THE DIPLOMATIC HISTORY OF CHINA 


circumstances which admitted no patience, they have 
reconsidered the feelings of the government of their 
neighboring country, and, with the exception of the arti- 
cles relating to Fukien, which is to be the subject of 
an exchange of notes as has already been agreed upon 
by the representatives of both nations, will undertake 
to detach the Group V from the present negotiations, and 
discuss it separately in the future. Therefore the Chinese 
Government should appreciate the friendly feeling of the 
Imperial Government by immediately accepting, without 
any alteration, all articles of Groups 1, 2, 3 and 4 and 
the exchange of notes in the revised proposals presented 
on the 26th of April.” *? . 

Coerced by the ultimatum, China yielded. On the 
next day, she replied and accepted the demands as set 
forth in the ultimatum.®? On May 25, 1915, two treaties 
were signed, one relating to Shantung and the other South 
Manchuria and Eastern Inner Mongolia, and thirteen 
notes were exchanged covering the rest of the articles 
as accepted. The only addition was the pledge of the 
Japanese Government to restore the leased territory of 
Kiaochow, subject to certain conditions.** 

Thus ended the most sensational diplomatic negotia- 
tion of this period of Chinese foreign relations. By one 
bold assault on China, when the European powers were 
occupied in a death grapple on the battlefields of Europe, 
Japan made herself the virtual successor to Germany in 
Shantung; opened up the whole of South Manchuria 
to the exploitation of her subjects, made an exclusive 
sphere of interest of Eastern Inner Mongolia, preserved 
the Hanyehping Company for the joint codperation of 
the Japanese and Chinese capitalists, and secured the 
pledge of the non-alienation of China’s coast. What she 
had failed to force on China was Group V, which, had 
it been accepted, would have made China virtually a pro- 
tectorate or vassal of Japan. 

Analyzing the demands of Japan from the point of 


COOPERATION AND CONTROL 77 


view of the international struggle for concessions, Jap- 
an’s action was simply to consolidate her own position 
in China, especially in Shantung, South Manchuria, and 
Eastern Inner Mongolia, and Fukien, so that when the 
war should be over and the European tide of aggression 
should again flow back to China, she would be well en- 
trenched in these regions in any international struggle 
for concessions. Viewed, however, from the point of 
view of international codperation and control, Japan’s 
action was simply an attempt to forestall the possible 
international control of China, which she was far-sighted 
enough to forsee and to anticipate by the overture of 
Japanese control as embodied in Group V. Thus, right 
or wrong, Japan had taken good advantage of the oppor- 
tunity presented by the European War to consolidate 
her own position in China. 

The Treaties of May 25, 1915, however, did not satisfy 
the Japanese, especially the military party. To the lat- 
ter, the treaty was only a temporary adjustment, waiting 
for a future and more opportune moment to execute its 
complete program in China. Its aims, to put them in a 
nutshell, were nothing less than to secure a stranglehold 
of control over the whole of China, for which reason 
the Japanese Government reserved the right for future 
discussion of Group V, and to wrest the sovereign power 
from China over South Manchuria and Eastern Inner 
Mongolia, for which purpose an event soon occurred 
which gave the necessary pretense. 

In August, 1916, a conflict occurred between the Chinese 
and Japanese soldiers at Changkiatun, a Mongol-Man- 
churian town, resulting in casualties on both sides. The 
original cause leading to the armed conflict was a quarrel 
and fist-fight between a Japanese on one hand, who had 
beaten a Chinese boy for refusal to sell fish at his price, 
and several Chinese soldiers who came to the rescue of the 
boy on the other. Taking advantage of this incident, 
the Japanese Government at once demanded not only 


78 THE DIPLOMATIC HISTORY OF CHINA 


reparation and apology, which were expected, but, to 
the surprise of China, the police power and military 
supervision of South Manchuria and Eastern Inner Mon- 
golia also; °° ‘China to agree to the stationing of Japanese 
police officers in places in South Manchuria and Eastern 
Inner Mongolia where their presence was considered 
necessary for the protection of Japanese subjects,’ and 
“Chinese military cadet schools to employ a certain num- 
ber of Japanese officers as instructors.” 

These demands again opened the wound of the Chinese 
as created by the Twenty-one Demands. As a result, 
viewing this as another attempt to revive Group V, the 
Chinese rose and resisted the demands with all their 
might. Meanwhile the Okuma Cabinet, which had en- 
gineered the Twenty-one Demands and also those for the 
Changkiatun incident, suffered severe popular censure 
for the mishandling of Chinese relations, and were com- 
pelled to yield to the Terauchi Cabinet, which adopted a 
more conciliatory attitude. Consequently the case was 
closed without the concession of police power and the 
military supervision of South Manchuria and Eastern 
Inner Mongolia, but merely with the ordinary apology 
and compensation due to Japan. 


While Japan was thus bullying China, the question of 
China’s entrance into the war on the side of the Allies 
came into prominence. At the beginning of the war, 
China had intimated her intention to join in the attack 
on Tsingtau, but the proposal was not favorably enter- 
tained.°° Again, during the monarchial restoration in 
the latter part of 1915, Yuan Shih-kai, to win the sup- 
port of the Allies to his monarchial project, had again 
offered to join the Allies, a proposal which the Russian 
and French legations had favorably entertained, but 
from which Japan and Great Britain had dissented.” 
Then came the circular note of February 4, 1917, of the 
United States inviting the neutral nations to join in a 


- COOPERATION AND CONTROL 79 


diplomatic severance from Germany. At the urgent solici- 
tation of the United States minister and other Allied 

agents, China took the bold step on March 14, 1917, when 
she broke off her relations with Germany. 

Following the diplomatic break, the question naturally 
arose as to the declaration of war on Germany and 
Austria. The pros and cons of the argument were pre- 
sented. The opinion seemed to be evenly divided. Those 
favoring the step believed that the Allies were fighting 
for democracy and the rights of weaker nations, and 
that the entrance of China would give her a seat at the 
Peace Conference when she could defend her own in- 
terests. It must also be noticed here that the senti- 
mental ground of following the lead of her best and 
most disinterested friend, the United States, played no 
small part in influencing the decision of the Govern- 
ment. Those opposing it, on the other hand, feared 
that Germany might win the war, and then would visit 
retribution on China, and, moreover, they were not at 
all certain as to the professions of the Allies regarding 
their war aims. 

While Chinese opinion was so divided, Japan cast the 
weight of her influence on the side of the opposition. 
Her minister at Peking counseled President Li Yuan- 
hung not to follow the example of the United States.®§ 
Meanwhile, realizing that, in the event of China’s en- 
trance into the war, she would certainly contest the Ger- 
man rights in Shantung at the Peace Conference, and, 
recalling the painful experience of the tripartite inter- 
vention in 1895 which deprived her of the Liaotung 
Peninsula, Japan moved to forestall such an eventuality. 
She approached the Allied Governments during February 
and March of 1917 for assurances as to the final dis- 
posal of the German Islands in the Pacific north of 
the equator and German rights in Shantung. The allied 
governments gave their pledges, one after the other, the 
British on February 16, the French on March 1, the 


80 THE DIPLOMATIC HISTORY OF CHINA 


Russian on March 5, the Italian on March 23, 1917.5° 
The agreement as to these secret assurances was not 
known to China nor to the United States, until the 
Peace Conference when the Shantung question was con- 
sidered. Having thus received the secret pledges, Japan 
withdrew her opposition to China’s entrance into the 
war. 

The withdrawal of Japan’s opposition did not, how- 
ever, leave China free to take the momentous step. She 
had another obstacle to overcome which soon proved 
to be of vital consequence, and that was the opposition 
of the Chinese Parliament. Being dominated by the 
opposition, the Parliament refused to declare war under 
the leadership of the northern party. Thus a deadlock 
ensued between the Parliament and the Cabinet. To 
cut the knot, the President dismissed the Prime Min- 
ister, the leader of the northern party. Thereupon the 
northern party, threatened by the imminent loss of posi- 
tion, revolted and demanded the dissolution of the Par- 
liament. Under the pressure of the northern military 
governors, the President yielded and dissolved the Par- 
liament. The southern or so-called constitutional party 
forthwith left Peking in a body, and assembling at Can- ~ 
ton, established a provisional military government in op- 
position to the Peking government, and at the same time 
declared war on the north. Thus the civil war com- 
menced. Meanwhile the northern party had again gained 
control of the Peking government by defeating General 
Chang Hsun who had taken advantage of the situation 
by an attempt to reéstablish the Manchu Dynasty. Once 
more firmly seated in the saddle in Peking, the northern 
military party declared war on Germany and Austria- 
Hungary on August 14, 1917.°° 


In this connection it should be said that when the 
question of the declaration of war had plunged China 
into civil dissension, President Wilson, on June 7, 1917, 


COOPERATION AND CONTROL 81 


addressed a friendly note to the Chinese Government, 
warning them against internal discord, and advising that 
the entry of China into the war was of secondary con- 
sideration, while the establishment of a central, united 
and responsible government was of prime importance.*? 
To this note the Japanese took strong exception, and, in 
fact, deeply resented the unwarranted interference of 
the United States in the affairs of China without first 
consulting Japan.® 

To secure the recognition from the United States of 
her special position in China and for some other minor 
affairs, and following the practice of the other powers 
then in vogue of sending war missions to the United 
States, Japan sent an Imperial Mission in August, 1917, 
to the United States under the leadership of Viscount 
Ishii.°® As a consequence of the negotiations, an agree- 
ment was concluded on November 2, 1917, between Sec- 
retary Lansing and Viscount Ishii, now commonly 
known as the Lansing-Ishii Agreement. Japan and the 
United States reaffirmed the Open Door policy in China, 
and, in addition, they “deny that they have any purpose 
to infringe in any way the independence or territorial 
integrity’ of China. The United States, however, on 
the other hand, recognized Japan’s special interets in 
China, particularly in those sections where the territories 
are contiguous.®* 

This agreement was entered into without the knowl- 
edge of the Chinese Government. Fearful of what the 
recognition by the United States of Japan’s special inter- 
ests in China might mean in the future, the Chinese 
Government despatched a declaration to the Govern- 
ments of the United States and Japan,® announcing that 
China would not be bound by any agreement.entered into 
by other countries, and that she would respect special 
interests of another nation due to territorial propinquity 
only in so far as they are provided in the existing 
treaties. 


82 THE DIPLOMATIC HISTORY OF CHINA 


Following the Lansing-Ishii agreement, the German 
menace in Siberia loomed large, threatening the very 
existence of China and Japan. The Russian Soviets 
had just surrendered Russia to Germany, and German 
and Austrian prisoners were active in Siberia. To fore- 
stall the possible invasion through Siberia by the Ger- 
man and Austrian prisoners, Japan and China concluded, 
on March 19, 1918, two secret agreements, one relating 
to military coOperation and the other to naval. The 
agreements were to be enforced upon the commence- 
ment of hostilities, but “shall become null and void as 
soon as the military operations of China and Japan 
against the enemy countries of Germany and Austria 
come tolanivend.(\* 


On November 11, 1918, the Armistice of the Great 
War was declared, and on January 18, 1919, the Paris 
Peace Conference was organized. As an ally, China 
was admitted as one of the minor states with two pleni- 
potentiary seats at the peace table. China claimed, inter 
alia, the restoration of her rights in Shantung, including 
the leased territory of Kiaochau, the Tsingtao-Tsinan 
Railway, and the mines adjoining thereto.®7 On the 
other hand, Japan claimed the same German rights in 
Shantung on the strength of the secret pledges obtained 
from the Allied Governments in February and March 
of 1917, and her pledge that she would restore, sub- 
ject to certain conditions, the leased territory of 
Kiaochau. Thus the issues were joined. Both China 
and Japan claimed the same rights in Shantung, which 
Germany had held. 

The decision of the case, as we know, rested with 
President Wilson. Great Britain and France, having 
already pledged to Japan, Lloyd George and Clémenceau 
were unable to do otherwise than to support Japan’s 
claim. Italy had withdrawn from the Council of Five 
in consequence of the Fiume question. President Wil- 


COOPERATION AND CONTROL 83 


son was left alone to decide the case. If he should de- 
cide in favor of China, he might cause the exodus of 
the Japanese delegation, as he had witnessed a few 
days before the painful scene of the Italian withdrawal. 
If, on the other hand, he should decide in favor of 
Japan, he would compromise his principles of justice 
and right, especially in vivid contrast with the stand he 
had taken on the Fiume question. As he was bent on 
consummating the organization of the League, however, 
and as he could not afford to lose Japan from its mem- 
bership, he yielded, and on April 30, awarded the deci- 
sion to Japan. 

With the announcement of this decision, the Chinese 
Peace Commission was not only gravely disappointed, 
but also at a loss to know what to do: “Shall China sign 
the Peace Treaty with Germany with the Shantung 
clauses in? Or, shall she refuse to sign and thus not 
become a member of the League ?”—That was the ques- 
tion. China could not assent to the Shantung decision, 
and yet she could not, and would not, be excluded from 
the membership of the League. In the face of these 
conflicting considerations, the Chinese Peace Delegation 
wisely decided to sign the treaty and thereby become a 
member of the League, but with a reservation on the 
Shantung clauses (Arts. 156, 157 and 158). To this 
end the Chinese Peace Delegation entered a formal res- 
ervation on May 6 at the Plenary Session of the Pre- 
liminary Peace Conference. To the dismay and sur- 
prise of the Chinese delegates, however, the reservation 
was rejected, and even a declaration to the effect that the 
signature of the Chinese plenipotentiaries was not to 
preclude China from demanding at a suitable moment 
the reconsideration of the Shantung question. As China 
would rather lose membership in the League than sign 
her own warrant for the unjust disposition of German 
rights in Shantung, the Chinese delegates refused to 
sign the treaty on June 28, 1919.° The signing, how- 


84 THE DIPLOMATIC HISTORY OF CHINA 


ever, of the subsequent Austrian Treaty made China a 
member of the League. 

The effect on the Chinese people of the Shantung 
decision was of the greatest significance. It caused the 
Chinese to realize that the world had not yet attained a 
stage of development when right would always win on 
the merits of right-only, but that the right to win must 
be backed by might. It also caused the Chinese to realize 
that it was useless to look for help from friendly Pow- 
ers, but they must find salvation among themselves. It 
further impressed on the Chinese mind that the source 
of weakness was due to the corruption and incompetency 
of the Chinese Government, rather than to the inherent 
weakness of the people themselves. As a result of these 
painful realizations, the Chinese nationalism, cut to its 
quick, burst out in magnificent exuberance. When the 
Shantung decision reached China, the students com- 
menced a strike, and drove out of office several most 
notorious pro-Japanese officials, who were believed to. 
have betrayed China. Then followed a nation-wide 
boycott against the use of Japanese goods. On the other 
hand, the effect of the decision on Japan was not salu- 
tary. While victorious at the Peace Conference, she 
lost the confidence and admiration of many of her 
friends. 


As the war was over, the Powers, maimed but not 
entirely disabled, returned to China again as their sphere 
of action in the Orient. Will they follow the policy of 
an international struggle for concessions, or of inter- 
national cooperation and control? ‘This is the question 
that every earnest student of the foreign relations of 
China would wish to know. Hitherto all indications 
point to the conclusion that the Powers returning to 
China would adopt the policy of international codpera- 
tion and control. The United States, the champion of 
the Open Door policy, has abandoned her policy of aloof- 


COOPERATION AND CONTROL 85 


ness, and is ready to participate in the affairs of China, 
and exert her influence for the principles of the Open 
Door doctrine. Besides, the Powers were too much in- 
jured by the war to be able to enter into another heated 
contest for concessions, at least for the near future. 
Further, the close cooperation which they have experi- 
enced during the war will enable them to follow the 
policy of international codperation and control rather 
than that of international struggle for concessions. 

To give concrete effect to this policy of international 
cooperation and control, the banking groups of the Al- 
lied Powers,—France, Great Britain, Japan and the 
United States,—at the invitation of the United States 
Government, met at the Paris Peace Conference on May 
11 and 12, 1919. The step for such an international 
banking conference relating to China had been previ- 
ously determined at a conference of a number of Ameri- 
can bankers at the Department of State in June, 1918, 
which was convened in consequence of the request of 
the Chinese Government for a war loan. The Confer- 
ence of May 11 and 12, 1918, at Paris, resulted in the 
tentative formation of a New International Banking 
Consortium. The qualification for membership is the 
relinquishment in favor of the Consortium of all prior 
options to make loans in China. The bankers of the 
four Powers are to be organized into national banking 
groups, each participating in full partnership, and on 
a basis of equality. The Consortium is not to invade 
the field of private enterprises, but is to limit its sphere 
of action to public undertakings of a basic character. 
All agreements of the Consortium must be subject to 
the approval of the Governments of the national groups 
concerned. The final agreement of the Consortium was 
signed on October 15, 1920, in New York City. 

It soon developed, however, that Japan was not in 
perfect accord with the agreement of the Consortium. 
Prior to the final agreement of 1920, the Japanese Govy- 


86 THE DIPLOMATIC HISTORY OF CHINA 


ernment qualified its assent by the reservation that South 
Manchuria and Eastern Inner Mongolia should be ex- 
cluded from the operation of the New Consortium. As 
such a reservation would be contrary to the principles 
of the Open Door doctrine, and would put Japan in a 
special status in the Consortium, it was not accepted by 
the other Powers. Japan, however, insisted, and that 
caused delay in the formation of the Consortium. 

Finally, to settle the difficulty, Thomas W. Lamont 
was requested by the American banking group, with the 
approval of the French and British groups, and the con- 
currence of the Department of State, to visit Japan, 
which Mr. Lamont did in March, 1920. As a conse- 
quence, a compromise was reached, whereupon Japan 
withdrew the reservation in toto, and authorized her 
banking group to enter into the Consortium without any 
qualification.®° 


Viewing this period as a whole, in recapitulation, we 
can say that this was a period of international coopera- 
tion and control. The opening of this period saw the 
conclusion of the reorganization loan, which was a clear 
evidence of international codperation and control. The 
close of the Great War witnessed the creation of a new 
international banking Consortium, which is a physical 
embodiment of the policy. This policy was interrupted 
first by the withdrawal of the United States in 1913, 
which was followed by a temporary revival of the inter- 
national struggle for concessions, and then by the inter- 
position of the World War, which drew all rival nations 
to the battlefields of Europe, leaving Japan alone, su- 
preme and untrammeled in the Far East, the oppor- 
tunity of which she had fully availed herself. 

But during this period we may also notice that new 
forces have come into the life of China. The first is 
the Japanese effort to gain the control of China during | 
the World War. In order to forestall the exigency of 


COOPERATION AND CONTROL 87 


the international control of China, Japan made the abor- 
tive attempt by the presentation of Group V of the 21 
demands. The other is the full awakening and maturity 
of Chinese nationalism, which was touched to the 
quick by the Shantung decision 2nd which promises to 
be the savior of Chinese independence in the days to 


come. 


This completes our sketch of the diplomatic history 
of China. Viewing the four periods as a whole, we 
clearly discern that there are definite tendencies and 
forces at work. 

First, we have seen that the Chinese did not welcome 
Western intercourse in the first and second periods, and, 
in fact, they were hostile to the unwarranted intertfer- 
ence with their isolation and tranquillity. During the 
first period they were haughty, feeling themselves supe- 
rior to western barbarians. During the second period, 
while they had abandoned the conceit of superiority, they 
were still antagonistic to the west. ‘This hostile attitude 
culminated in the Boxer Uprising of the third period 
in 1900. ‘Thereafter, however, the Chinese attitude 
underwent a radical change. Instead of feeling superior, 
they regarded themselves as inferior; instead of being 
hostile, they welcomed Western contact, and were 
anxious to learn the best of Occidental civilization. 

_ On the other hand, the attitude of the Western na- 
tions, during the first period, was one of struggling for 
equality, and during the second period, that of treating 
China more or less on a basis of equality; but when the 
third period came, it distinctly changed for the worse 
and they regarded the Chinese as an inferior and down- 
trodden race destined to be ruled by the West. After, 
however, the Chinese Revolution took place in 1911, it 
began to change for the better, and when China joined 
the Allies in 1917 and subsequently proved herself to be 
worthy of respect and admiration at the Paris Peace 


88 THE DIPLOMATIC HISTORY OF CHINA 


Conference and in the League, Western states began to 
assume more and more an attitude of equality. 

Second, the method and nature of Western aggression 
have undergone a radical change during the four periods 
of Chinese diplomatic history. In the first period, the 
Western states were merely bent on opening China for 
trade and intercourse. In the second period, having 
opened China, they deprived her of one dependency 
after the other. In the third period, when protection 
from the dependencies was eliminated and the weakness 
of China was revealed by Japan’s easy victory, they 
entered into an international struggle for concessions, 
victimizing China and threatening her very integrity. In 
the fourth and present period, however, they have 
changed their policy from struggle to cooperation, and 
from partition to control. 

On the other hand, the Chinese were determined to 
preserve themselves in the face of Western aggression. 
In the first period, while China was being opened up, 
they were fast asleep. In the second period, when the 
outlying dependencies were being taken away one after 
the other, the Chinese were still asleep. In the third 
period, when Western nations began to threaten the 
very existence of China, they speedily woke up. They 
first resorted to the fanatical attempt to expel all “for- 
eign devils” from China, as was shown in the Boxer 
Uprising, and having failed in that endeavor and being 
humiliated, they directed their efforts at the reforma- 
tion of their government, as manifested in the Chinese 
Revolution of 1911. In the fourth and present period, 
Chinese nationalism was wide-awake, determined to save 
their land and independence from the encroachments of 
either the West or Japan. 

With this sketch of Chinese diplomatic history, let 
us now turn to the policies of the Great Powers in 
China, which will be treated in Parts II and III.7° 


COOPERATION AND CONTROL 89 


NOTES TO CHAPTER IV 


1. MacMurray, Treaties and Agreements with and Concern- 
ing China, 1911/2. 

2. MacMurray, ibid., China Year Book, 1912, p. 288. 

3. MacMurray, ibid., 1911/2. 

4. MacMurray, ibid., 1913/5. 

5. MacMurray, ibid., 1912/4. ; 

6. For a full account, see F. H. Huang, Public Debts in 
China, ch. on The Reorganization Loan of 1913, pp. 56-71. 

Ls es H. Huang, ibid., pp. 58-59; China Year Book, 1913, pp. 
358-359. 

re MacMurray, op. cit., 1912/9; China Year Book, 1913, pp. 
359-364. 

9A. China Year Book, 1914, p. 379. 

9B. U.S. For. Rel., 1913, pp. 170-171. 

10. MacMurray, op. cit., 1913/5. 

11. China Year Book, 1914, p. 387. 

12. MacMurray, op. cit., 1912/11. 

13. MacMurray, ibid., 1912/11. 

14. Far Eastern Review, Jan., 1921, pp. 31-33. 

15. MacMurray, op. cit., 1913/8. 

16. MacMurray, 1913/10. 

17, MacMurray, 1914/2. 

18. MacMurray, 1895/5. 

19. MacMurray, 1913/16. 

20. It is to be observed here in this connection that later, on 
September 24, 1918, Japan secured the concession of these two 
railways, changing, however, Hanchuang to Hsuchowfu. 

vt. MacMurray, op. cit., 1913/12. 

22. MacMurray, 1914/7. 

23. MacMurray, 1914/7. 

24. MacMurray, 1914/4. 

25. The Chino- Ty ees Negotiations, published by the Chinese 
Government, 1915, pp. 

26. MacMurray, op. ue 1916/6. 

27. MacMurray, 1916/6. 

28. MacMurray, 1916/7. 

29. MacMurray, 1913/9. 

30. MacMurray, 1913/9. 

31. MacMurray, 1918/16. 

32. MacMurray, 1917/9. 

33. MacMurray, 1918/7. 

34. MacMurray, 1918/9. 

35. MacMurray, 1918/11. 

36. MacMurray, 1916/3. 

37. MacMurray, 1911/13. 

38. MacMurray, 1912/12. 

39. MacMurray, 1913/11. 


90 THE DIPLOMATIC HISTORY OF CHINA 


40. MacMurray, 1914/12. 

41. MacMurray, 1915/10. 

42. The Shantung Question, officially presented by the Chinese 
Peace Delegation to the Paris Conference of 1919, published by 
the Chinese National Welfare Society, 1920, pp. 39-40. 

43. The Chino-Japanese Negotiations, p. 19. 

44, Ibid., pp. 19-21. 

45. Ibid., p. 21. 

46. ‘Ibid., p. 21. L : 

47, Millard, Democracy and the Eastern Question, Appendix, 
pp. 376-377. nae ; 

48, The Chino-Japanese Negotiations, op. cit., p. 23. 

49. Ibid., pp. 24-27. 

50. Ibid... 9. 2/7: 

51. Ibid., pp. 28-29. 

52. Ibid., p. 42. 

53. Millard, op. cit., App., pp. 405-406. 

54. The Chino-Japanese Negotiations, pp. 53-54. 1 

55. B. L. Putnam Weale, The Fight for the Republic in China, 
p. 302. 

56. The Shantung Question, p. 40; Millard, op. cit., pp. 55-96. 

57. Ibid., pp. 97-100. 

58. Ibid., p. 106. 

59. Millard’s Review, Supplement, July 17, 1920, China’s Case 
at the Peace Conference, pp. 1-3. 

60. The Shantung Question, App. to Vol. 2, No. 18, pp. 64-65. 

61. W. R. Wheeler, China and the World War, pp. 93-94. 

62. Millard, Democracy and the Eastern Question, p. 118 et 
seq. 
63. For a detailed account of the Mission, see The Imperial 
Japanese Mission to the United States, 1917, pub. by the Car- 
negie Endowment for Internatl. Peace. 

64. Hearings before the Committee on Foreign Relations in 
pe United States Senate, 66th Congress, First Session, pp. 225- 

65. Millard, op. cit., p. 164. 

66. Ibid., App. C, pp. 421-425. 

67. For the full text of the claims, see Millard’s Review, Sup- 
ees, July 17, 1920, China’s Case at the Peace Conference, 
pp. 4-6. 

68. For a full account, see Millard’s Review, Supp., July 17, 
1920, pp. 10-13. 

69. For a full account, see Thomas W. Lamont, Preliminary 
Report on the New Consortium for China, 1920; also see below 
the chapters on the New International Banking Consortium. 

70. During this period Chile entered into treaty relations with 
China on Feb. 18, 1915 (MacMurray, 1915/2), and Switzerland, 
on Jutie 13, 1918 (MacMurray, 1918/8). 


PART II 


se -OLICIES OF THE GREAT POWERS IN CHINA 


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V 
THE POLICY OF RUSSIA IN CHINA 


TuE policy of Russia in China has been one of terri- 
torial expansion. She has pursued this policy persistently 
until checked by the Russo-Japanese War of 1904-5, and 
interrupted by the Soviet Revolution of 1917. The ob- 
jective behind her policy was to reach an ice-free seaport. 
Russia had attempted to approach the Mediterranean 
through the Balkan Peninsula; but had been definitely 
blocked, for the Great Powers considered her advance in 
that direction dangerous to the integrity of the Ottoman 
Empire, and to the balance of power in Europe. She 
had then attempted to reach the Persian Gulf and the 
Indian Ocean through Persia and Central Asia, but that 
door had been effectively closed by England. Thus frus- 
trated, she finally concentrated all her energies on estab- 
lishing a foothold on the Pacific. After the acquisition 
of the maritime province by the Treaty of 1860 with 
China, she built the city of Vladivostok facing the Pacific 
but that was ice-bound for part of the year. So she was 
compelled to turn southward toward North China. 

To carry out this policy astutely, she adopted a method 
of reaching her ends, which was unique and, at the 
same time, unscrupulous. That is, she always pretended 
to be the friend of the weaker state which she aimed 
to absorb or annex by extending the protection of her 
alliance to the latter. Having thus broken down the 
wall of distrust, she would then obtain strategic points 
Or concessions as a preliminary to her final occupation 
or absorption. In addition, she did not hesitate to re- 
sort to corruption, in case that could open up the way 
to her. Expressed in the words of E, J. Dillon:? 


93 


94 POLICIES OF GREAT POWERS IN CHINA 


“Russia’s foreign policy in the past, whatever its real 
motives, may therefore be summarily described in the 
light of its effects as ruinous ‘protection’ of the feeble. 
It was the lethal hug of the polar bear. She would shield 
the government of a weaker neighbor from the immediate 
consequences of its own folly, and enable it to go on mis- 
governing its subjects, thwarting attempts at internal re- 
form, financial and administrative. The body politic 
would thus be left to decompose until it entered upon a 
stage sufficiently advanced to allow of its being digested 
almost without an effort... . It is thus that Georgia, 
Persia, Turkey, China, Korea, were dealt with.” 


In short, the Russian policy was imperialistic, unscrupu- 
lous, and opportunistic. 

Having seen the general nature of the Russian policy, 
we shall now trace its development. The Siberian ex- 
pansion of Russia was effected in the 17th century, within 
a period of seventy years. It was done, not by the order 
of the Government, but rather by the pluck and initiative 
of the freebooters of fortune who went there for self- 
interest and new abode. It was consummated very much 
as was the westward expansion of the United States, 
except that the Siberian expansion did not result in any 
great educational and economic development of the set- 
tled regions. Using the language of E. J. Harrison: ? 


“It is equally important to note that the action of these 
Siberian pioneers was wholly voluntary and in no sense 
dictated by orders from the central government. Later 
on it was continued under the pretext of searching for 
‘free lands,’ but personal gain was actually at the root 
of the movement from the first to the last, the empire 
occupying quite a secondary place in the calculations of 
these adventurers, although the Government had no ob- 
jection to recognizing an accomplished fact, and assumed 
nominal control over the lands..thus subjugated. In 
truth, however, for three hundred years Siberia remained 
destitute of proper administration, means of communi- 


THE POLICY OF RUSSIA IN CHINA 95 


cation, colonization, education, and real citizenship. .. . 
The ostensible outward success of this enterprise was due, 
not to a species of epic pressure, or all-powerful national 
momentum, but simply to the absence of resistance from 
the other side... .” 


This eastward expansion of Russia into Siberia could 
not but come into conflict with the Chinese. As early 
as about 1650 the Russian pioneers had penetrated the 
Amur region, which was then Chinese territory. At this 
time the Manchu Dynasty which had just established 
itself on the Chinese throne (1642) was busily occupied 
with the conquest and pacification of China proper. 
After about twenty years, however, the Manchus, having 
finally established themselves in China, turned their at- 
tention to the Russian encroachment. They wiped out 
the Russian settlements at Sungari and pushed the Rus- 
sians back far beyond the Amur region and established 
Aigun and Tsitsihar as advance posts against Russian 
aggression. ‘Twice did the Russians return to Albazin, 
but twice were they driven back. As a consequence of 
this conflict, the Treaty of Nerchinsk was concluded 
in 1689. The Albazin fortress of Russia was demol- 
ished, and the Amur region became a de facto Chinese 
territory. Thus the Russians were pushed back by the 
Manchus in this early conflict.® 

After the lapse of more than a century and a half, 
another adventure of the Russians was made. This 
time, however, the advance was ordered with the sup- 
port, and under the guidance, of the Russian Govern- 
ment. About 1854 the Russians occupied the Amur re- 
gion again. This move was made largely because the 
Crimean War of that time had blocked the Russian 
ambition to reach an ice-free seaport through Constan- 
tinople, and the Russian Government was consequently 
compelled to seize the Amur River as the possible out- 
let.* This advance on the part of Russia was not op- 


96 POLICIES OF GREAT POWERS IN CHINA 


posed by the Chinese, for the Manchu Dynasty had 
then its hands full with the Taiping rebellion, which 
was threatening the safety of the Dynasty. 

Having accomplished the occupation, the Russian Gov- 
ernment proceeded to secure the recognition of a fait 
accompli from the Chinese Government. Characteristic 
of the foreign policy of Russia, the Czar’s Government 
took advantage of the Taiping rebellion and offered to 
suppress the revolt in exchange for the cession of Man-- 
churia,> which was, however, declined. Later, during 
the second war with Great Britain and France (1857- 
1860), as the allied forces were advancing on Canton 
and Taku, Russia again took advantage of the situa- 
tion and secured the recognition from China of the north- 
ern bank of the Amur River as Russian territory by the 
Treaty of Aigun, 1858.° Finally, as the allied forces 
captured Peking in 1860 to enforce the ratification of 
the treaty of Tientsin, 1858, she posed as the friend 
and savior of the Manchu Dynasty by inducing the quick 
withdrawal of the allied forces from Peking. In rec- 
ognition of this service, the Aigun treaty was confirmed 
and the Treaty of Peking was signed, ceding to Russia, 
as we have seen, the territory east of the Ussouri River, 
including the maritime province.*’ Thus, backed by the 
Russian Government, and taking advantage of the Tai- 
ping rebellion and China’s second war with Great Britain 
(and France), the second advance of Russia toward 
Manchuria was a success. 

Shortly after, Russia repeated the same practice again, 
but this time at another corner of China and not quite 
so successfully as in the Amur region. Again taking ad- 
vantage of the rebellions in Chinese Turkestan, Russia 
occupied Kuldja in Ili in 1871, with a proclamation that 
she would withdraw as soon as China was able to assume 
the functions of government in the territory. To repeat, 
by 1878 General Tso Tsung-tang having reconquered the 
rebellious region, China demanded the restoration of Ili. 


THE POLICY OF RUSSIA IN CHINA 9/ 


By the Treaty of 1879, concluded by Chung Chow, Rus- 
‘sia was given the western parts of Ili, and the impor- 
tant military passes of the Tienshan Mountains, with an 
indemnity of 5,000,000 roubles. ‘This treaty was re- 
jected by the Chinese Government, and the second treaty 
was concluded by Marquis Tseng, in 1881, whose elo- 
quent tongue and diplomatic skill, together with the fiery 
zeal of General Tso Tsung-tang for military resistance, 
brought back to China the greater part of Ili, together 
with the strategic passes, through the payment, however, 
of an increased indemnity of 9,000,000 roubles. Thus, 
in this case, Russia, while gaining the western strip of 
Ili, was, on the whole, unsuccessful in her expansion in 
that part of China. 

Bent, however, on her policy of territorial expansion, 
she soon seized other opportunities that presented them- 
selves. In 1895, Japan had defeated China, and, by the 
Treaty of Shimonoseki, had snatched, besides Korea, 
the Pescadores and Formosa, and the Liaotung Penin- 
sula, including the strategic naval base, Port Arthur. 
When the news of the cession of Liaotung reached his 
ears, it was said Count Witte hurried to the Czar Nicho- 
las II and said to him: 


“We cannot allow Japan to quit her islands and get a 
firm foothold upon the Asiatic mainland. That would 
effectively block our Far-Eastern policy of peaceful pene- 
tration.” § 


Therefore, again posing as the friend and savior of 
China, and in conjunction with Germany and France, 
she forced Japan to retrocede the Liaotung - Peninsula 
to China. Besides, she arranged an immediate loan of 
400,000,000 francs for China upon the guarantee of the 
Imperial Russian Government, thus relieving the Chinese 
Government of the pressing need for the first payment 
of the Japanese indemnity falling due at that time. Hav- 


98 POLICIES OF GREAT POWERS IN CHINA 


ing thus rendered effective assistance to China at her 
hour of need, she was ready to demand compensation. 

At that time, the Trans-Siberian Railway, started in 
1891, had just reached Lake Baikal. The question was 
as to which way it should extend,—by the Kiakhta-Peking 
route, or by the Amur River route, or via North Man- 
churia. As the Kiakhta-Peking route would surely 
arouse the suspicion of the other Powers, and as the Amur 
River route was confronted with great engineering diffi- 
culties and might also be accompanied by the possible 
risk of economic losses, the North Manchuria route was 
chosen. Having decided upon the route, the question 
naturally followed as to how to secure the consent of 
the Chinese Government to the construction of this rail- 
road. 

Opportunely, the Czar’s coronation was to take place 
in May, 1895. Li Hung-chang was requested to be sent 
to attend the coronation. Before his departure, he had 
entered into a tentative agreement with Count Cassini, 
the then Russian minister at Peking, as to the construc- 
tion of the Trans-Siberian Railway across the plains of 
North Manchuria to Vladivostok. While at the coro- 
nation, Count Witte convinced Li Hung-chang that, to 
render effective armed assistance to China in case of a 
future struggle with Japan, it was necessary for Russia 
to send her troops quickly to Manchuria, and that, to do 
so, a railway would need to be constructed through North 
Manchuria toward Vladivostok.? In the words of Count 
Witte: 


“In my conference with Li Hung-chang, I dwelt on the 
service which he had recently done to his country. I 
assured him that, having proclaimed the principle of 
China’s territorial integrity, we intended to adhere to 
it in the future; but, to be able to uphold this principle, 
I argued, we must be in a position, in case of emergency, 
to render to China armed assistance. Such aid we would 
not be able to render her until both European Russia 


THE POLICY OF RUSSIA IN CHINA = 99 


and Vladivostok were connected with China by rail, 
our armed forces being concentrated in European 
Russia.’ 7° 


As a result of negotiations, a secret agreement was 
reached which was virtually a secret defensive alliance.** 
Every aggression directed by Japan against Russia or 
China was to be deemed as necessarily bringing about 
the immediate application of the Treaty of Alliance 
(Art. 1). In this case, both Powers pledged to sup- 
port each other with all their military and naval forces 
(Art. 1). No treaty of peace could be made with the 
adversary without the consent of the other party (Art. 2). 
During the operations of the war, all parts of China were 
to be open to Russian warships which should receive the 
necessary help (Art. 3). To facilitate military co- 
operation, Russia was granted the right to build a rail- 
road across Heilungkiang and Kirin in the direction of 
Vladivostok (Art. 4). The treaty was to last for fif- 
teen years subject to renewal (Art. 6). Thus, by the 
pretense of an alliance, Russia obtained the railway con- 
cession which was so necessary at that time to connect 
Eastern Siberia with European Russia. 


“It must be confessed that in the light of subsequent 
events the conclusion of the agreement was in the nature 
of a diplomatic farce. Russia was bent upon aggression 
in Manchuria, and the promise of military assistance in 
certain eventualities was merely tendered as a means of 
protecting Chinese amour propre.” 


Having entered into the Treaty of Alliance, not blindly, 
but with a full knowledge of Russia’s ulterior.aims, Li 
Hung-chang wrote,!* in July, 1895, shortly after the 
coronation of the Czar: 


“Russia is to-day our greatest friend and our most-to- 
be-feared enemy. She is our friend because Great Britain 
and France pose as friends also. She wishes to be a 


100 POLICIES OF GREAT POWERS IN CHINA 


better friend than they. She is our greatest enemy, be- 
cause what the Russians call the trend of her destiny 
makes her so. She dominates all Northern Asia and 
hopes some day to have preponderating influence in China. 
She will help us to keep Japan out, because she herself 
wants to get in.” 


No sooner had this prescience been recorded than the 
actual fulfillment came. Germany had seized Kiaochau 
in November, 1897, which was formerly earmarked by 
Russia in the so-called Cassini Convention. ‘The ques- 
tion was whether Russia should seize Port Arthur and 
Talienwan, the ice-free ports of North China, which had 
been the goal of Russian territorial expansion in Asia. 
Count Witte, a believer in the policy of peaceful pene- 
tration which presupposed the integrity of China, re- 
vealed later that he opposed the seizure in the Council, 
vehemently denouncing it as faithless and unwise,* and 
brought about the adverse vote of the Council. But 
Muraviov, the Russian Minister of Foreign Affairs at 
that time, who conceived the idea of seizing an ice-free 
seaport in East Asia, persuaded the Czar to take action 
contrary to the decision of the Council. In his explana- 
tion to Count Witte for the apparent deviation, the Czar 
offered the excuse that Port Arthur and Talienwan might 
be seized by Great Britain, which was later discovered, 
however, to be unfounded. 


““You know, Sergey Yulyevich,’ said the emperor to 
me, evidently somewhat put out, ‘I have decided to occupy 
Port Arthur and Talienwan. Our ships with troops 
are already on their way there. Here is why I have 
taken this step. After the conference the Foreign Min- 
ister reported to me that according to his information 
British warships were cruising off the ports in ques- 
tion, and that if we did not occupy them the British 
would do so.’ Muraviov’s information was, of course, 
era as I later found out from the British Ambassa- 

ey ae fa 


THE POLICY OF RUSSIA IN CHINA 101 


Thus Russia entered into the place whence she had forced 
Japan to recede, and thus, by this wanton seizure, she 
threw to the winds the Treaty of Alliance which, as we 
have seen, was merely used as a cloak under which to 
obtain the much needed railway concession and proba- 
bly to achieve her program of territorial expansion in 
North China. 

No sooner had Port Arthur and Talienwan been seized 
than another opportunity presented itself, which offered 
the irresistible temptation for the final consummation of 
the Russian design on Manchuria, and that was the Boxer 
Uprising in 1900. Quite in line with her traditional 
policy, and again taking advantage of the situation, Rus- 
sia occupied Manchuria.t® Having done so, her task 
was to secure the recognition of the Chinese Govern- 
ment. The tactics employed in this move were paralleled 
by those of 1860, when she wrested the Amur and 
maritime regions from China. As she then pretended 
to be the friend and savior of the Manchu Dynasty, 
she now repeated the same strategy. Shortly after the 
relief of the allied legations, she proposed, as we have 
observed, to the Powers to withdraw their diplomatic 
agents and military forces from Peking to Tientsin, 
and there wait for negotiation, which proposal was, 
however, not accepted by the allies.17 Again, during the 
negotiation she was in favor of referring the question 
of the amount of indemnity to the Hague Tribunal, and 
disposed to be lenient and moderate in regard to the 
punishment of the principal culprits.t® 

Thus by posing as friend of China, as she had done 
so many times before, she expected that thereby she 
could win the cession of Manchuria, as she had won 
the Amur and the maritime regions in 1860. To this 
end, while the allies were negotiating the final protocol 
of peace, she entered, as we recall, into a separate con- 
vention with the Tartar General in Mukden,}® virtually 
making Manchuria a Russian protectorate. To repeat, 


102 POLICIES OF GREAT POWERS IN CHINA 


frustrated by the protests of Great Britain, Japan and 
the United States, she entered into another convention 
known as the Lamdorff-Yangyu Convention,”° restricting 
the sovereign rights of China in Manchuria and North 
China. In addition, Russia later demanded the conces- 
sion of the monopoly of the economic development of 
Manchuria to be granted to the Russo-Asiatic Bank. All 
these demands China resisted, and Great Britain, Japan 
and the United States entered vigorous protests.” 

The Russian avalanche soon, however, met an effective 
check. On January 30, 1902, the Anglo-Japanese Alli- 
ance was concluded, aiming directly at the Russian ad- 
vance in Manchuria. Perceiving the peril of the oppo- 
sition, she at once changed her front and concluded 
the Treaty of March 26, 1902,?? promising to restore the 
Shanhaikwan-Newchang-Sinminting Railway, and _ to 
complete the evacuation of Manchuria in three succes- 
sive periods of six months each. When, as we have 
known, the first period of evacuation came, she fulfilled 
her pledge, but this only nominally, for she concentrated 
her withdrawn troops in the other strategic parts of 
Manchuria where she was yet allowed to remain. When, 
however, the second period of evacuation was due, she 
openly refused to effect the withdrawal, and in addition, 
presented to China, as conditions to further evacuation, 
Seven Articles,?> demanding, inter alia, the non- 
alienation of Manchuria and the closing of Manchuria 
against the economic enterprises of any other nation but 
Russia. What was worse, she concentrated her troops 
at Liaoyang, occupied Fenghangching and Antung, and 
sent troops across the Yalu River into Korea, thus 
threatening even the safety of Korea and Japan. 

At this juncture, as we recall, Japan stepped into the 
arena and demanded, on August 12, 1903, inter alia, a 
mutual undertaking to respect the integrity of China and 
Korea, and the reciprocal recognition of Japan’s pre- 
ponderating influence in Korea and Russia’s special in- 


THE POLICY OF RUSSIA IN CHINA — 103 


terest in Manchuria.** Throughout the negotiation, Rus- 
sia was willing to concede to Japan the recognition of 
her preponderance in Korea, but she insisted on Japan’s 
recognition of Manchuria as being outside her sphere of. 
influence, and refused to give the pledge, even to the 
very last moments of the negotiations, to respect the 
integrity of China in Manchuria. This refusal on the 
part of Russia clearly and conclusively evidenced Rus- 
sia’s intention to absorb or annex Manchuria. To this 
effect John Hay’s letter to President Roosevelt, on May 
12, 1903, further bears indirect testimony: 


“T have intimated to Cassini that the inevitable result 
of the present course of aggression would be the seizure 
by different powers of different provinces in China, and 
the accomplishment of the dismemberment of the Em- 
pire. He shouts in reply, ‘This is already done. China 
is dismembered and we are entitled to our share.’”’ 


The Russo-Japanese War (1904-5) that ensued 
resulted, it is to be remembered, in addition to the 
transference to Japan of the lease of Port Arthur and 
Talienwan, and of the southern section of the Russian- 
Manchurian Railway from Changchun to Port Arthur, 
in putting an effective check on the Russian advance in 
Manchuria. Having learned through the painful experi- 
ence of defeat, the policy of Russia thenceforth under- 
went a change from an offensive and aggressive to a 
conciliatory and defensive procedure. Bent more on the 
preservation of what she had than on the recovery of 
what was lost, she took measures of defense. The Amur 
Railway Bill was hastily passed by the Russian Duma, 
and the railway was constructed at great cost to the 
Government,—more for strategic purposes than for com- 
mercial. Thus the Chinese Eastern Railway was made 
the first line of defense, the Amur River the second, 
and the Amur Railway the third. Besides, Vladivostok 
was developed into a first-class fortress and naval sta- 


104 POLICIES OF GREAT POWERS IN CHINA 


tion. The Siberian Railway track was doubled, thus 
increasing its capacity for transportation. 

In addition to these defensive measures, she also 
adopted a more conciliatory attitude in her dealings 
with China and Japan. In the Harbin case of 1907, 
although she had at first insisted on the Russian ad- 
ministration of the municipality in that place, she never- 
theless came to a compromise with China in 1909, and 
arranged for partnership and codperation on a basis of 
equality.2° Regarding Japan, she also entertained a more 
chastened spirit. She entered into the first agreement 
with Japan on July 30, 1907,?7 pledging to preserve the 
status quo of their respective special interests in China, 
and later on July 4, 1910,?8 promising mutual cooperation 
in case of foreign interference with their respective in- 
terests in Manchuria, and lastly, in July, 1916, forming 
a secret alliance with Japan.?% °° 

Pursuing this defensive policy, Russia soon seized 
another opportunity to strengthen further her own de- 
fense. In 1911 the Revolution had plunged China into 
civil turmoil. Taking advantage of the situation, she 
detached Outer Mongolia from China and made it a 
buffer state between China and Russia,—though nom- 
inally under the suzerainty of China. To repeat what 
has been said, on November 3, 1912,34 she concluded a 
convention with Mongolia, pledging to assist the latter 
in maintaining the régime of autonomy, thus breaking 
away from the grip of the Peking Government, and 
putting a prohibition on the admission of Chinese troops 
and colonization of the land by the Chinese. A year 
later, by the convention with China, on November 5, 
1913,°° she exacted from China the recognition of the 
autonomy of Outer Mongolia and pledged not to send 
any troops thereto, nor to colonize the territory. By a 
subsequent agreement, on September 30, 1914,3? she 
obligated Outer Mongolia not to grant any railway con- 
cession in Outer Mongolia without first consulting Rus- 


THE POLICY OF RUSSIA IN CHINA § 105 


sia. Finally, to complete the entire process of making 
a buffer state of Outer Mongolia, and to bring about 
a definite understanding concerning the relationship be- 
tween Russia, Outer Mongolia and China, the tripartite 
agreement was concluded, on June 7, 1915.** Russia and 
China recognized the autonomy of Outer Mongolia 
(Art. 2), while Outer Mongolia recognized the Sino- 
Russian Convention of November 5, 1913 (Art. 1) and 
also the suzerainty of China (Art. 2). Outer Mon- 
golia was to have no right to conclude any international 
treaty with foreign powers respecting political and ter- 
ritorial questions (Art. 3). As regards questions of a 
political and territorial nature in Outer Mongolia, the 
Chinese Government was obligated to come to an agree- 
ment with the Russian Government through negotiation 
in which the authorities of Outer Mongolia should par- 
ticipate (Art. 3). Thus, by these successive conven- 
tions, Russia made Outer Mongolia a buffer state be- 
tween China and herself. By prohibiting Chinese coloni- 
zation and military establishment in Outer Mongolia, she 
succeeded in holding off the contact and therefore the 
conflict between the Chinese and the Russians at arm’s 
length. By requiring mutual agreement as to questions 
of a political and territorial nature in Outer Mongolia, 
she established herself as a co-overlord or joint suzerain 
over Outer Mongolia, and further paved the way for 
future expansion or annexation, the opportunity present- 
ing itself, as in Japan’s case in 1885, when she required 
of China previous notice for the dispatch of troops to 
Korea. 

When, however, the Soviet Revolution of 1917 came, 
the Russian policy was fundamentally changed. As the 
Soviet rule was the antithesis of the Czar régime, so 
the policy of the Russian Soviet Government in China 
was just the opposite of the Czar Government. Instead 
of seeking territorial, or political, or economic gains, it 
sought justice and restitution in China. Instead of hold- 


106 POLICIES OF GREAT POWERS IN CHINA 


ing China at a distance, it attempted to befriend China. 
In the telegram of March 26, 1920, the Soviet Minister 
of Foreign Affairs offered to the Chinese Government *° 
the restoration of the Chinese Eastern Railway, the can- 
cellation of the Boxer indemnity, the abolition of the 
Russian extraterritorial rights in China, and the abroga- 
tion of all those treaties, the object of which was to 
encroach upon the Chinese territorial rights.°° The Soviet 
telegram read in part as follows: *” 

“. . The Soviet Government offered at that time to 
the Chinese Government to enter into negotiations on 
the subject of annulling the Treaty of 1896, the Protocol 
of Peking, 1901, and all the agreements concluded with 
Japan from 1907 to 1916. That is to say to return to 
the Chinese people all that has been taken from them by 
the government of the Czar, either by authority of, or 
through an KR Vere with eee and the Allies. 


“The oveanaae or the BANE: Sentene to fhe! Chinese 
people without demanding any kind of compensation the 
Chinese Eastern Railway, as well as all the concessions, 
mineral, forestry, gold mines and others, which have been 
snatched from them by the government of the Czar, the 
government of Kerensky and the brigands, Holtvath, 
Semenoff, Koltchak, the Russian ex-generals, merchants 
and capitalists. 

“The government of the Soviet renounces the con- 
tribution due from China for the insurrection of Boxers 
in OOO Se fae 

“The government of Soviet abolishes all special privi- 
leges, all the concessions to Russian tradesmen in Chinese 
territory. No Russian official, priest or missionary, 
should dare interfere in Chinese affairs. If they commit 
a crime, they ought to be judged according to local laws 
and local justice... . 

“Beyond these principal points, the government of 
Soviet is ready to negotiate with the Chinese people rep- 
resented by its plenipotentiary, all other questions, and 
to liquidate once for all, all the acts of violence and 


THE POLICY OF RUSSIA IN CHINA 107 


injustice which have been committed against China by 
the former Russian Governments in concert with Japan 
and the Allies.’ °° 


This telegram China did not answer, having as yet 
not recognized Soviet Russia, but following this, by a 
Presidential Mandate of September 23, 1920,° the 
Chinese Government terminated all official relations with 
the old régime, withholding official recognition from 
the Russian minister at Peking and the Russian Consuls 
in China, and proclaiming that China would act as tem- 
porary trustee of Russian interests in China, pending the 
establishment of a National Government in Russia. This, 
however, did not abrogate the Sino-Russian Treaties, nor 
cancel the extraterritorial rights of the Russians.*° 

Thus, we can conclude, in recapitulation, that the policy 
of Russia up to the Russo-Japanese War, was pre- 
eminently one of territorial expansion under the guise 
of friendship and alliance and the advantage of critical 
opportunities, as evidenced by the session of the Amur 
and Maritime regions in 1858 and 1860, and the acquisi- 
tion of the western parts of Ili (1871-1881), and the 
seizure of Port Arthur and Talienwan during the gen- 
eral scramble of 1898, and finally the attempt to absorb 
Manchuria during and following the Boxer Uprising. 
We can also safely say that after the Russo-Japanese 
War, the policy of Russia in China was mainly con- 
ciliatory and defensive, changing, however, to aggres- 
siveness only during and following the Chinese Revo- 
lution, as evidenced by its creation of Outer Mongolia 
as a buffer state. It is to be observed, however, that 
when the Soviet Revolution came, the Russian policy 
was radically changed into that of International Broth- 
erhood and Soviet Propaganda. As to what the future 
of the Russian policy may be, it will depend largely upon 
the duration of the Soviet régime. 


108 POLICIES OF GREAT POWERS IN CHINA 


NOTES TO CHAPTER V 


1. Dillon, The Eclipse of Russia, p. 224. 

2. E. J. Harrison, Peace or War East of Baikal?, p. 21. 

3. Ibid., pp. 23-25. 

4, Lancelot Lawton, The Empires of the Far East, Vol. II, 
1291. 

S$.) Dbid,, “Volk tL prize, ; 

6. Morse, The International Relations of the Chinese Empire, 
Volpe 4774 

7. Hertslet, Vol. I, No. 82, p. 461 et seq. ee 

8. Patrick Gallagher, America’s Aims and Asia’s Aspirations, 
p. 130; cf. Count Witte, My Dealings with the Li Hung Chang, 
World’s Work, January, 1921. i 

9. Count Witte, My Dealings with Li Hung Chang. Article 
published in the World’s Work, January, 1921, p. 302 et seq. 

10. Tbid., p..302: 

11. Patrick Gallagher, op. cit., App. B., pp. 456-457; Lancelot 
Lawton, op. cit., Vol. II, pp. 1295-1296; Far Eastern Review, 
January, 1921, p. 23. 

12. Lancelot Lawton, op. cit., Vol. II, p. 1296. 

13. W. F. Mannix, Memoirs of Li Hung Chang, 1913, p. 118. 

14. Count Witte, My Dealings with Li Hung Chang, p. 307 


t seq. 

15. Ibid, p. 307. 

. Morse, op. cit., Vol.-ITI, p. 321. 

17. Ibid., Vol. III, p. 305. 

18. Ibid., Vol. III, p. 341 et seq. 

19. Asakawa, Russo-Japanese Conflict, pp. 166-167, China, No. 
2, 1904, No. 5, January 4, 1901; vide supra, Chapter on the Inter- 
national Struggle for Concessions. 

20. Asakawa, op. cit., p. 174, The Times, February 28, 1901; 
China, No. 2, 1904, No. 6, No. 14, No. 25 and No. 42; vide supra, 
Chapter on the International Struggle for Concessions. 

21. Vide supra, Chapter on the International Struggle for Con- 
cessions. 

22. Hertslet, op. cit., No. 90, pp. 509-512. 

23. Count Okuma, Fifty Years of Japan, p. 117; Japan’s For- 
eign Relations, by T. Soyishima; Asakawa, op. cit., pp. 242-244; 
China, No. 2, 1904, No. 94. 

24. Asakawa, op. cit., pp. 303-304; vide supra, Chapter on the 
International Struggle for Concessions. For a full account of 
the Russo-Japanese Negotiations leading to the war, see Asa- 
kawa, The Russo-Japanese Conflict, pp. 296-362. 

25. W.R. Thayer, The Life of John Hay, Vol. II, p. 368. 

26. Lancelot Lawton, op. cit., Vol. II, p. 1300 et seq. 

27. MacMurray, Treaties witle and Concerning China, 1907/11. 
28. MacMurray, 1910/1. 

29. MacMurray, 1916/9. 


p. 


e 


THE POLICY OF RUSSIA IN CHINA 109 


30. By these agreements and by later actions, it seems to be 
quite clear and certain that an understanding has been reached 
that the sphere of influence of Russia in China should be North 
Manchuria and Outer Mongolia, while that of Japan in China 
should be South Manchuria and Eastern Inner Mongolia. The 
rejection of the neutralization plan of Knox evidenced that 
Russia, in connivance with Japan, meant to dominate her sphere 
of influence and to make them as exclusive as possible. 

31. MacMurray, 1912/12. 

32. MacMurray, 1913/11. 

33. MacMurray, 1914/12. 

34. MacMurray, 1915/10. 

35. H. K. Tong, Russian Soviet would Befriend China, article 
in Millard’s Review, January 5, 1920, pp. 24-26. 

36. Following the telegram came the Soviet Commission for 
the negotiation of new treaties, who were accorded due courtesy, 
but who were declined to consider any overtures. 

37. H. K. Tong, Russian Soviet would Befriend China, p. 25. 

38. The authenticity of this soviet telegram has yet to be 
established. 

39. H. K. Tong, The New Development of Sino-Russian Re- 
lations, article in Millard’s Review, October 9, 1920, pp. 281-282. 

40. H. K. Tong, The New Development of Sino-Russian Re- 
lations, pp. 281-282. “The Russian Minister and his subordi- 
nates and the consuls from the old Russian Government have 
lost their official status long since the outbreak of the Russian 
Revolution. They cannot represent the Russia of to-day. ... 
As the Russian Minister has been verbally informed of the 
policy which it is the intention of this Government to pursue, it 
is, therefore, hereby proclaimed that recognition of the Russian 
Minister and his subordinates as well as the Russian Consuls 
from the old Russian Government is withheld forthwith. 

“. . . But the friendly relationship hitherto existing between 
the two countries in regard to the treatment of Russian citizens 
will be maintained. All respectable Russian citizens and their 
private property will be protected as usual, provided they strictly 
observe the rules in force in this country, which will follow the 
footsteps of the allied powers and maintain a neutral attitude 
toward the political troubles in Russia. . . .” 


VI 
THE POLICY OF FRANGEAIN, CHiN 


Tue policy of France in China has been to create a 
colonial base on the border of China, to establish a 
sphere of influence in China adjoining her colonial pos- 
session, and to codperate with her allies in the affairs 
of China. To create a colonial base, she established her 
protectorate over Annam and Tonkin (1883-1885). To 
institute a sphere of influence in the provinces of China 
bordering on Tonkin, she exacted the declaration of 
non-alienation of these provinces—Yunnan, Kwangsi, 
and Kwangtung—and also extended her Tonkin railway 
into Yunnan, penetrating the southwestern corner of 
China. In the international affairs of China, she gen- 
erally adopted the policy of cooperation with her allies. 

The policy of France in China has been largely a re- 
flection of her policy in European politics. Her actions 
in China were either the direct products or parallels 
of her European policies. She joined Great Britain 
in the second war on China (1857-1860), largely as a 
continuation to the allied cooperation between Great 
Britain and France in the Crimean War (1854-1856). 
She annexed Cochin-China (1858-1867) mainly under 
the inspiration of Napoleon III, who pursued a policy of 
territorial aggrandizement. She receded and became 
less aggressive from 1871 to 1880, when she recuperated 
her strength from the injuries of the Franco-Prussian 
War. After this, from 1880 to 1904, she resumed her 
colonial activities and entered into the general scramble 
for colonial possessions and other concessions which so 
characterized the close of the nineteenth century. She 
established her protectorate over Annam in 1883, 

110 


THE POLICY OF FRANCE IN CHINA 111 


snatched Tonkin from China in the same year, and 
_ marked the three provinces of China bordering on Ton- 
kin as her sphere of influence. The dual alliance of 
1891 brought about her codperation, in the affairs of 
China, with Russia; her Entente Cordiale of 1904, with 
Great Britain; and her participation in the new Inter- 
national Banking Consortium, with Great Britain and 
the United States. Thus her Oriental policies were, and 
are clearly, the reflections of her European policies. 


The first step, as we have seen, in the program of 
France in Far East was to establish a colonial foothold 
upon which she could base her power and from which 
she could tap the wealth of China. Accordingly, from 
1858 to 1867, after some intermittent fighting with 
Annam, she annexed Cochin-China and also established 
a protectorate over Cambodia. Shortly after the Franco- 
Prussian War, while not yet recovered from the disas- 
trous effects thereof, as we recall, she entered into a 
treaty of alliance with Annam on March 15, 1874,? rec- 
ognizing the independence of Annam and extending to 
her the protection of a French alliance, thus pursuing 
the same policy of Russia of absorbing a weaker state 
under the guise of a protecting alliance. Article One 
provided: 

“Il y aura, paix, amitié et alliance perpétuelles entre 
la France et le Royaume d’Annam.” Article Two 
stipulated : 


“Son Excellence le Président de la République fran- 
Gaise, reconnaissant la souveraineté du Roi de l’Annam 
et son entiere indépendence, vis-a-vis de toute puissance 
étrangére, quelle qu’elle soit, lui promet aide et assist- 
ance et s’engage a lui donner sur sa demande, et gratuite- 
ment, l’appui nécessaire pour maintenir dans ses Etats, 
Pordré et la tranquillité, pour le dépendre contre toute 
attaque, et pour détruire la piraterie qui désole une 
partie des cotes du Royaume.” 


112 POLICIES OF GREAT POWERS IN CHINA 


In addition, Annam pledged not to enter into any 
treaties not in accord with the one made between France 
and Annam and without informing the French Govern- 
ment, while France remitted the balance of the war in- 
demnity.2. Thus, by this treaty of alliance, France de- 
tached Annam from her traditional relation with China, 
and made her an independent state under the pro- 
tection of the French Alliance, thus virtually supplant- 
ing China’s suzerainty. 

This treaty of alliance, however, was a mere prelude 
to the eventual establishment of the French protecto- 
rate. Consequently, on June 6, 1884, when the French 
forces had already come into conflict with the Chinese 
garrisons in Tonkin, France imposed upon Annam the 
treaty of Hué, which definitely established the French 
protectorate over Annam. Article One reads: 


“L’Annam reconnait et accepte le Protectorat de la 
France, la France représentera l’Annam dans toutes ses 
Relations Extérieures. Les Annamites a l’étranger 
seront placés sous la protections de la France.” 


A Resident General, representing the Government of 
France, was to assume the functions of the protectorate 
and to attend to the foreign relations of Annam with- 
out, however, interfering with the local administration 
of the provinces (Art. 5). Assistant Residents under 
the order of the Resident General were to be placed in 
Tonkin (Art. 6).3 


The colonial base having thus being created, her next 
step was to establish a sphere of influence, wherein she 
could exploit the wealth of China. It will be recalled, 
as a reward for her service in the tripartite intervention 
for the retrocession of Liaotung, she secured, on June 
20, 1895, besides certain territorial advantages on the 
frontier of Tonkin,* the opening to trade ® of Lungchow, 


THE POLICY OF FRANCE IN CHINA 113 
Mengtze, Ho-K’eou and Szemao (Art. 2 and 3), special 


mining privileges in Yunnan, Kwangsi, Kwangtung 
(Art. 5) and the right of extension of the Annam 
railway into China (Art. 5).6 Following the general 
scramble for leases and concessions, she obtained the 
lease of Kwangchowan, the right of a railway from 
Tonkin to Yunnan, and the privilege of the appoint- 
ment of a Frenchman to head the Chinese postal serv- 
ice,’ and also the concession of a railway from Kwang- 
chowan to Leichow or to a point in the neighborhood 
thereof (Art. 7).° Besides, she procured from China 
the declaration of non-alienation of the Island of 
Hainan® and of the territory bordering on Tonkin.?° 
Later, on September 26, 1914,11 she received the note 
of the Chinese Foreign Minister giving preference to 
French nationals in railway and mining enterprises in 
Kwangsi. 


Side by side with her policy of creating a sphere of 
influence in Southwestern China was her policy of 
working hand in hand with her ally in the North. In 
almost all affairs of importance, she marched shoulder 
to shoulder with Russia. She joined Russia in 1895 in 
the tripartite intervention for the retrocession of Liao- 
tung. She practically made the entire flotation of the 
Russo-French loan of 400,000,000 francs under the 
guarantee of the Russian Government for the relief of 
China. During the Boxer Uprising she accepted the 
Russian proposal to withdraw the allied diplomatic 
agents and the military forces from Peking to Tientsin 
to wait for the negotiation of peace, which was rejected 
generally by the other allied powers.1? In response to 
the Anglo-Japanese Alliance, she and Russia jointly 
made a counter-declaration on March 3, 1902," pro- 
claiming that the foundation of the French-Russian 
Policy in the Far East was the same as the principles 
embodied in the Anglo-Japanese Alliance, but reserving 


114 POLICIES OF GREAT POWERS IN CHINA 


the right of action in “the contingency of either the ag- 
gressive action of third powers or renewed disturbances 
in China.” During the Russo-Japanese War that en- 
sued, though neutral, she extended her hospitality to the 
Russian fleet en route to Orient. When after the war, 
however, Russia and Japan came to an agreement in 
1907, she likewise followed and entered into an under- 
standing with Japan on June 10, 1907™ engaging to 
support “the territorial rights of the two contracting 
parties in the continent of Asia.” In reply to the neu- 
tralization proposal of Knox,'* while approving the 
principles underlying the plan, she declined to adhere 
thereto, “unless by a common accord with the two pow- 
ers (Russia and Japan) most interested had been dis- 
posed to renounce the contract rights in Manchuria and 
to side with the American suggestion.” 

As a further evidence of the French policy of co- 
operation with Russia in the Far East, M. A. Gérard, 
the French Minister in Peking from 1894 to 1897, wrote 
in his “Ma Mission En Chine” the following passage 
regarding the instructions he received of cooperating 
with Russia: 


“Mes Instructions me prescrivaient enfin, aprés 
quelques recommendations spéciales sur wun _ certain 


nombre d’affaires courantes de ne jamais perdre de vu, ~ 


dans les démarches que J’aurais a faire et dans l’action 
que J’aurais a exercer a Pekin, le concert et union qu'il 


convenait de maintenir avec l’action de la Russie, notre — 


alliée. Les intéréts de la Russie en Extréme—Orient 
etant plus étendus et plus considérables que les notres, 
il était naturel et nécessaire que notre concourse lui fut 
assuré et que le caractére de notre alliance fit manifeste 
a la Chine elle-méme et aux puisances représentées a 
Peking. Les événements dont l’Extréme Orient allait 
€tre la théatre achéveraient dedonner a cette clause 


finale de mes instructions toute la signification et toute — 


la portée que y étaient contenues. Ils allaient étre la 


f 
"a 


gre POLICY OF FRANCE IN .CHINA. 115 


premi¢re mise a l’epreuve la premiere de monstration 
de Valliance franco-russe et nous fournir ainsi Voccas- 
sion de notre premiere victoire.” *® 


Besides diplomatic coGperation, France attempted to 
connect her own interests in Southwestern China with 
the Russian interests in North China by means of rail- 
ways. Endeavoring to grasp the hand of her northern 
ally across the plains of China and in conjunction with 
Russia, she backed the Belgian syndicate to secure the 
concession of the Peking-Hankow railway, and when 
the loan was floated in Paris and Brussels, the French 
subscribed nearly four-fifths of the loan, while the Bel- 
gians secured only one-fifth, thus showing clearly that 
the line was Belgian only in name.” 

Besides, her financial agents together with the Bel- 
gians also attempted to gain control of the Canton- 
Hankow Railway, which was conceded to American 
capitalists, and were about to succeed in taking charge 
of the road when the Chinese Government intervened 
and demanded the cancellation of the concession.*® 
Thus, had the French and Belgian interests succeeded 
in gaining the control of the Canton-Hankow Railway, 
they would have controlled, in addition to the Peking- 
Hankow Railway, the entire North and South trunk line 
running from Peking through Hankow to Canton, thus 
linking up the Russian interests in North and the 
French interest in South, under the cloak of the neu- 
tralized Belgium. Parallel to the Peking-Hankow- 
Canton line, France and Belgium, through their respec- 
tive financial agencies, obtained the concession of the 
Tatung-Chengtu railway, on July 22, 1913.1° In the 
next year, on January 21, 1914, France secured the 
contract for the Ching-Yu railway running through 
Yanchow-Yunnanfu-Suifu-Changking.2? Thus, by the 
acquisition of these two concessions, and, in addition, 
the French interests in the Hankow-Szechuan line,— 


116 POLICIES OF GREAT POWERS IN CHINA 


running from Tatung near Mongolia to Chengtu and 
from Chengtu’ to Chungking and from Chungking to 
Yunnanfu,—France extended her hands northward 
across Western China until she clasped those of Russia 
in Mongolia and North China. 


' The Entente Cordiale of 1904, however, added one 
more ally to France in the Orient. Hitherto she had 
codperated mainly with Russia. She had now to work, 
not only with Russia, but also with her new ally,— 
Great Britain. The Entente Cordiale manifested itself 
in the agreement of codperation between the British 
group of syndicates (the British and the Chinese Cor- 
poration, Limited, Chinese Central Railways, Limited, 
etc.) and the French group (Banque de L’Indo-Chine, 
etc.) on October 2, 1905; ?+ and later in the contract for 
the Pukow-Sinyang Railway signed on November 14, 
1913,?? the benefits of which the French shareholders 
received in their due proportion. Again, in the case of 
the Hukuang loan, the Entente Cordiale paved the way. 
for the amicable admission of the French interests: 
France was to share equally in the four power loan 
(Art. 2) and to appoint the chief engineer to the last 
section of 600 kilometers to Chengtu on the Hankow- 
Chengtu line (Art. 4).?8 
| 
| 
The Great War, however, changed the diplomatic 
affiliations of France. The entrance of the United 
States into the struggle gave France a new ally or rather — 
associate in the war; and the formation of the New 
International Banking Consortium in May, 1918, fur- 
ther facilitated the future codperation between France 
and the United States. The Soviet Revolution of 1917, 
however, brought to pass the loss of Czaristic Russia 
as the ally of France, and what is worse, changed 
France from being a warm, loyal friend to a bitter op- 
ponent to Russia, largely because of the repudiation by 


THE POLICY OF FRANCE IN CHINA 117 


Soviet Russia of her French debts. As a manifestation 
of this hostile opposition, the French Government ad- 
vised China not to enter into commercial agreements 
with the Russian delegation from Verhne Udinsk.** 


Now that the war is over, the question naturally 
arises: What will be the policy of France in China? 
On the one hand, it is reported, though without authentic 
evidence, that she has entered into the tripartite under- 
standing with Great Britain and Japan, reserving Yun- 
nan, Kwangsi and the Western part of Kwangtung as 
her region of exploitation. She is said to have been 
attracted by the idea of the tripartite division of China 
as a possible way of recoupment for the losses of the 
war and also for the collection of the French pre-war 
investments in Russia. 


“It was so secret that M. Pitchon, then Foreign Min- 
ister for Foreign Affairs, thought that an imperialistic 
policy is the way to recoup the position of France in the 
world.” ?° 


On the other hand, it is generally believed that France 
will cooperate with her allies in the war,—especially 
Great Britain and the United States. It is, therefore, 
expected that she will follow the principles of the Open 
Door and maintain the equal opportunity of trade and 
the integrity of China. In agreement with this belief, 
André Tardieu wrote: 7° 


“M. Clémenceau contemplated that France would de- 
vote her general activity to three essential objects; 
Firstly, the maintenance of her regained security; Sec- 
ondly, the renewal of her economic strength; Lastly, the 
Organization of peace according to these principles of 
national liberty. ... These three objects could be 
achieved by one means only: the maintenance of those 
alliances and friendly relations which enabled France 


118 POLICIES OF GREAT POWERS IN CHINA 


to win the war. ... Hence, his policy of defensive 
agreements with Great Britain and the United States; 
Hence also the action and prolonged assistance to those 
young nations that owed their origin or extension to 
the victory—Bohemia, Poland, Jugo-Slavia, Roumania, 
and Greece. 


In spite of conflicting opinions, we can, however, make 
certain conclusions regarding the future of the French 
policy in China. Under the present conditions of close 
cooperation between Great Britain and France as allies, 
and the United States as their associate in the World 
War, we may conclude that France would more likely 
cooperate with Great Britain and the United States and 
maintain the Open Door policy. Her unqualified par- 
ticipation in the New International Banking Consortium 
evidenced that she meant to side with Great Britain and 
the United States in upholding the policy of the Open 
Door and international codperation. If, however, the 
New Consortium should fail, resulting in the break- 
down of the policy of international codperation and the 
resumption of the old international struggle for conces- 
sions, and especially if Japan should assume the leader- 
ship in the affairs of China and champion the sphere 
policy, it is then safe to say that France would likewise 
abandon the Open Door policy and adopt the policy of 
exploitation and aggression. 

The future policy of France in China depends, there- 
fore, upon whether the United States or Japan should 
assume the leadership in the Chinese affairs. If it 
should be the United States, then she would follow the 
leadership of America and uphold the policy of the 
Open Door and international codperation. If it should 
be Japan, she would then fall back on the policy of the 
Closed Door and exploitation. It is expected, however, 
that the New Consortium will succeed, and the United 
States thereby maintain her leadership and that France 
will then codperate with her and Great Britain. 


THE POLICY OF FRANCE IN CHINA 119 


NOTES TO CHAPTER VI 


1. Documents Diplomatiques, Affairs Du Tonkin, 1874/82, p. 1 
et seq. 

2. State Papers, Vol. 65, 1874, Traite de Paix et d’Alliance 
Entre la France et l’Annam, Signé a Saigan, le 15 Mars, 1874, 
pp. 375-381. 

3. State Papers, Vol. 75, 1884, pp. 100-103. 

4. Hertslet, Vol. 1, No. 52, pp. 321-323. 

5. Hertslet, No. 53, pp. 323-327. 

6. Vide supra, Chapter on the International Struggle for Con- 
cessions. 

7. Hertslet, No. 54, pp. 327-328. 

8. Hertslet, No. 55, pp. 329-331. 

9. MacMurray, 1897/2, March 15, 1897. 

10. MacMurray, 1898/6, April 16, 1898. 

11. MacMurray, 1895/5. 

12. Sir E. Monson to Lord Salisbury, Aug. 31, 1900, China, 
No. 1, 1901, p. 128. 

13. U. S. For. Rel., 1902, p. 931, Memorandum handed to the 
Secretary of State, March 19, 1902. 

14, MacMurray, 1907/7. 

15. U. S. For. Rel., 1910, Ambassador Bacon to the Sec. of 
State, Feb. 4, 1910. 

16. A. Gérard, Ma Mission En Chine, pp. xxiii-xxiv. 

17. M. C. Shu, Railway Problems in China, p. 76 et seq. 

18. Ibid., p. 82 et seq. 

19. MacMurray, 1913/8. 

20. MacMurray, 1914/2. 

21. MacMurray, 1905/11. 

22. MacMurray, 1913/12. 

23. Memorandum of terms of agreement come to at a meeting 
at the Banque de Il’Indo-Chine, Paris, on the 23rd day of May, 
1910, U. S. For. Rel., pp. 280-281; MacMurray, 1911/5. 

24. Millard’s Review, Sept. 4, 1920, p. 4. 

25. Millard’s Review, Supplement, July 17, 1920, p. 19. 

_ 26. André Tardieu, French Policy after War, article published 
in World’s Work, Jan., 1921, p. 242 et seq. 


VII 
THE POLICY OF GERMANY IN CHINA 


In the decade lying between 1895 and 1905 the policy 
of Germany in China was rather indefinite and unde- 
cided. It inclined probably, more or less, toward the 
example of Russia. After the Russo-Japanese War 
(1904-1905), however, her policy changed and she be- 
came a devoted adherent of the doctrine of the Open 
Door. 

In the first years (1895-1905) of her participation in 
the affairs of the Far East, she was quite uncommited 
as to the fate of China. Whether that country was to 
be partitioned, or demarcated into spheres of influence, 
or remain intact under the shelter of the Open Door, 
seemed not to matter to her, provided she be a party 
to whatever benefits accrued therefrom. She would not 
object to a partition which would give her a new colonial 
possession. Nor would she object to the establishment 
of a sphere of influence, which would yield an outlet 
for her capital and commerce. Nor, again, would she 
be unwilling to welcome a strong and stable China, 
which would be a counterpoise to her own rivals—Great 
Britain, Japan, France and Russia. Whatever the fate 
of China, the thing she cared for most was that she 
should not lose out in any game that was being played. 
Prince Von Bulow, the then Chancellor of Germany, 
said in the Reichstag on April 27, 1898:+ 


“We should certainly not take the initiative in a par- 
tition of China. All that we did was to see in good time 
that, whatever happened, we should not draw a blank. 
The moment when the train starts does not always de- 

120 


THE POLICY OF GERMANY IN CHINA 121 


pend on the will of the passenger. It is his business to 
see that he does not miss the train. The devil take the 
hindmost.” 


The first event that brought her influence to the Far 
East, as we have seen, was the tripartite intervention 
for the retrocession of Liaotung in 1895. Her joining 
in the intervention was largely dictated by the policy of 
encouraging Russian expansion in the Far East, so that 
she could avoid a conflict with Russia in Europe. To 
this effect Prince Von Bilow wrote in his “Imperial 
Germany”: ” 


“Towards the end of the eighties Prince Bismarck 
once said to me, with reference to Russia and Asia: 
‘In Russia there is a very serious amount of unrest and 
agitation which may easily result in an explosion. It 
would be best for the peace of the world if the explo- 
sion took place in Asia and not in Europe. We must 
be careful not to stand just in the way, otherwise we 
may have to bear the brunt of it.’ If we had allowed 
ourselves to be thrust forward against Russia before the 
Russo-Japanese War, we should have had to bear the 
brunt.” 


Quite in line with the opinion of Bismarck, Germany 
did not stand in the way of Russian expansion in North 
China, but on the contrary, gave her passive encourage- 
ment thereto. 


Following the tripartite intervention, Germany made 
a second move and that was the capture of Kiaochow. 
She had long desired to obtain the possession of that 
port, and in November, 1897, when, in a general attack 
by the robbers on the village, two German priests were 
killed in Kiaochwang, Shantung, “in circumstances be- 
yond the control of the local authorities,” ? she seized 
the pretext and occupied Kiaochow. As a consequence, 


122 POLICIES OF GREAT POWERS IN CHINA 


by the convention of March 6, 1898,* she obtained the 
lease of Kiaochow for ninety-nine years (Section I, 
Art. 2). Besides, she made Shantung an exclusive 
sphere of influence by acquiring the right of first option 
in any undertaking, in which foreign assistance is 
needed : 


“Tf within the province of Shantung any matters are 
undertaken for which foreign assistance, whether in per- 
sonnel, or in capital, or in material, is invited, China 
agrees that the German merchants concerned shall first 
be asked whether they wish to undertake the works and 
provide the materials. In case the German merchants 
do not wish to undertake the said works and provide 
the materials, then as a matter of fairness China will 
be free to make such other arrangements as suits her 
convenience.” (Section 3.) 


Germany, on the other hand, engaged “at no time to 
sublet the territory leased from China to another power” 
(Section «I, \Art.. 5): 

The significance of the lease convention needs to be 
emphasized. Said von Bilow:°® 


6é 


. . . In any case, I say, we have secured in Kiao- 
chow a strategical- and political position which assures 
us a decisive influence on the future of the Far East. 
Irom this strong position we can look with complacency 
on the development of affairs. We have such a large 
sphere of action and such important tasks before us that 
we have no occasion to grudge other nations the conces- 
sions made them. German diplomacy will pursue its 
path in the East as everywhere else—calmly, firmly and 
peacefully. We will never play the part of mischief 
maker, nor will we play that of Cinderella.” 


Thus, in the occupation of Kiaochow, its strategic 
location was fully realized. It is, and undoubtedly will 
continue to be, the leading commercial port of North 


THE POLICY OF GERMANY IN CHINA 123 


China. Tientsin, its rival, is closed in winter by ice; 
_ Kiaochow is open throughout the year. When the rail- 
ways connect the Tientsin-Pukow line with the Peking- 
Hankow line, that is, by the Tsinan-Shunteh railway, 
and when the Lung-Hai railway is completed, running 
through the Yellow River Basin connecting with Kiao- 
chow by the Kaomi-Hsuchow line, Kiaochow will be- 
come the outlet of the trade of North China and the 
Yellow River Basin, just as Shanghai is the outlet of 
the trade of the Yangtze Valley. The trade of North 
China, which goes now through the Peking-Hankow rail- 
way to Peking and thence to Tientsin for export will in 
time be all diverted to Kiaochow. Von Bilow therefore 
said: “We have secured in Kiaochow a stragetical and 
political position which assures us a decisive influence 
on the future of the Far East.” 

The German occupation of Kiaochow was also sig- 
nificant, not only from the point of view of its strategic 
location, but also from that of European politics and 
the German policy of Weltpolitik. The capture of 
Kiaochow was the first practical step of the German 
policy of Weltpolitik and the German expansion. It 
also dated the beginning of the German naval expan- 
sion, resulting in a deadly rivalry with Great Britain. 
To this effect Prince von Bulow said: ° 


“About the time when we began to build our fleet, 
(our landing in Kiaochow took place in the autumn of 
1897, when I first held office as Secretary of State for 
foreign affairs. ‘It is from the year of Kiaochow that 
the growth of the formidable German navy dates,’ wrote 
the Times in the course of the present war; this paper 
has from the first followed the development of our 
sea power with eyes sharpened by envy. It was quite 
true that the fact that we established ourselves on the 
coast of China was directly and indirectly connected 
with our naval program, and was our first practical step 
along the path of world politics. A few weeks after 


124 POLICIES OF GREAT POWERS IN CHINA 


this) we concluded the Shantung treaty with China, 
which was one of the most significant actions in mod- 
ern German history and which secured for us a ‘place 
in the Sun’ in the Far East, on the shores of the Pacific 
Ocean which have great future before them.” 


Soon after the seizure of Kiaochow came the Boxer 
Uprising of 1900. Taking advantage of the oppor- 
tunity, Germany decided to play the leading role in the 
international expedition to China and thus to enhance 
her prestige before the eyes of the Powers. She, there- 
fore, despatched the largest number of troops (amount- 
ing to 17,000) under the command of Count Von Wal- 
dersee whose military prestige far surpassed those of 
the military commanders of the other Powers. Although 
arriving too late for the relief of the Legations, he was 
recognized by the commanders of all Powers, except 
the United States, as Commander-in-Chief of the Allied 
forces in China. 

Further, the Kaiser used this opportunity to wreak 
vengeance. He instructed his soldiers to give no quar- 
ter and to so terrorize the Chinese that they would not 
dare to look into the face of a German soldier again. 
In obedience to instructions, the German military car- 
ried out a policy of depredation and annihilation in 
Paotingfu and other places of North China far beyond 
what was necessary. Similiarly, during the negotiation 
for settlement, the German representative proved to be 
the most uncompromising and relentless, demanding 
enormous indemnities and insisting on the death penalty 
for the principal culprits. 

In face of such a revengeful and terrorizing attitude 
on the part of Germany, one could scarcely believe the 
news when it was reported that on October 16, 1900,° 
Germany had entered into an agreement with Great 
Britain affirming the Open Door (Art. 1), and pledging 
to uphold the territorial integrity of China (Art. 2), 


THE POLICY OF GERMANY IN CHINA. 125 


and, in case of any Power making aggressions against 
_ China, to come to an understanding to protect their in- 
terests (Art. 3). One naturally asked: “What does this 
mean? Is Germany sincere?” and the answer must be 
in the negative. In his famous speech made in the 
Reichstag, March 15, 1901, von Bulow said in sub- 
stance: 


“The Anglo-German agreement has no reference to 
Manchuria (Hear, hear and sensations) ...I can 
now add that during the negotiations which led to the 
conclusion of this agreement, we left no room for any 
doubt that we did not take it as applying to Manchuria, 
as regards the future of Manchuria. Really, Gentle- 
men, I can imagine nothing which we regard with more 
indifference (Hear, hear on the right).® 


Again, to the same effect, Secretary John Hay testi- 
a Oe 


“My heart is heavy about John Bull. Do you twig 
his attitude to Germany? When the Anglo-German 
pact came out I took a day or two to find out what it 
meant. I soon learned from Berlin that it meant a hor- 
rible practical joke on England. From London, I found 
out what I had suspected, but what it astounded me 
after all to be assured of—that they did not know! 
When Japan joined in the pact, I asked them why. 
They said, we don’t know. Only if there is any fun 
going on, we want to be in! Cassini was furious— 
Seat may be because he has not been let into the 
joke!” 


Later, it was discovered that Germany entered the 
pact, not to uphold the Open Door doctrine and the in- 
tegrity of China, but rather to deprive Great Britain 
of the exclusive rights in the Yangtze.°® As a condi- 
tion for the evacuation of Shanghai, Germany specially 
insisted on the Open Door in the Yangtze, while reserv- 


126 POLICIES OF GREAT POWERS IN CHINA 


ing, on the other hand, Shantung as her own exclusive 
preserve: ** 


“The Peking Government and the Yangtze viceroys 
shall engage not to grant to any Power special advan- 
tages of a political, military, maritime or economic na- 
ture, nor to allow the occupation of any other points 
commanding the river either below or above Shanghai.” 


Against this, Japan and Great Britain protested; as a 
consequence, no secret agreement relating thereto was 
signed, but a general declaration was professed to have 
been received by the German Government that the Open 
Door would be maintained in the Yangtze Valley.” 

So far, the policy of Germany in China was more like 
the Russian policy than that of the Open Door. She 
maintained her railway guards along the Tsingtau- 
Tsinan Railway much the same as Russia in Manchuria. 
In 1900 the Kaiser made a speech to the Russian Gov- 
ernment that his policy in China was just like the Rus- 
sian policy.4? In the case of the Russian aggression in 
Manchuria, while Great Britain, Japan and the United 
States entered vigorous protests,44 Germany remained 
ominously silent. As France was not expected to pro- 
test, being the ally of Russia, Germany’s failure to pro- 
test constituted a lonely exception, clearly betraying her 
intention and policy of silently countenancing Russian 
expansion in Eastern Asia.?° 

When the Russo-Japanese War came, however, the 
policy of Germany in China underwent a radical change. 
Isolated during the war and confronted by two hostile 
coalitions (the Dual Alliance of France and Russia and 
the Anglo-Japanese Alliance) she realized that, if in 
consequence of the war, there should be any spoliation 
of China, she could obtain only Shantung; while the 
other Powers, most of whom were her enemies, would 
gain the rest of China. This, obviously, was detrimental 
to her interests. In anticipation, therefore, she proposed 


ee. 


THE POLICY OF GERMANY IN CHINA 127 


to the United States Government to make a declaration 
for the maintenance of the integrity of China, and to 
counsel the Powers to refrain from any act of spoliation 
at the close of the war. With this proposal the United 
States agreed. 

Dating from this proposal to the United States, Ger- 
many committed herself thenceforth to the Open Door 
Doctrine. Instead of keeping aloof, she joined the Pow- 
ers in the Hukuang loan,’" the currency reform and in- 
dustrial development loan,* and the reorganization 
loan.°* Instead of aggression, she showed due respect 
for Chinese sovereignty. By the end of 1905, she 
handed her postal service to the Chinese.1°8 By the Con- 
vention of November 28, 1905,2° she withdrew her 
troops from Kiaochow and Kaomi. By the amendment 
of December 1, 1905,74 to the agreement of April 17, 
1899, concerning the maritime customs office at Tsingtau, 
she abandoned her restrictions on the Chinese customs 
derogatory to Chinese sovereignty and restored the 
service almost to the same status as elsewhere except 
requiring twenty percent of the proceeds as contribu- 
tion to the government of Tsingtau. 

Further, instead of domination and exploitation, she 
manifested remarkable self-restraint. By the agreement 
of July 24, 1911,?? with the exception of “the Fangtze 
and Tzechwan mining areas and the mining district from 
Chinlingchen along the Kiaochow-Chinan Railway in a 
northerly direction for a distance of thirty li to Chang- 
tien” and some other areas, “all mining rights hitherto 
granted by China to the company within thirty li (15 
kilometers) on both sides of the Kiaochow-Chinan Rail- 
road now in operation, the Tientsin-Pukow Railroad 
now under construction and the Kiaochow-I-Chow Rail- 
road recently surveyed are hereby canceled” (Art. 3), 
stipulating, however, that in case foreign assistance, 
either in capital or engineers or material, should be 
needed in the development of the relinquished districts, 


128 POLICIES OF GREAT POWERS IN CHINA 


first option should be given to the Germans. Likewise, 
by the agreement of December 31, 1913,” relating to the 
extension of the Tsingtau-Tsinan Railway, while she 
procured the two concessions, one from Kaomi to 
Hsuchowfu and the other from Tsinan to Shunteh, she 
surrendered the railway concessions, acquired, under the 
Convention of March 6, 1898, for the lease of Kuao- 
chow.?# 

What is more, instead of being uncompromising and 
revengeful and relentless, as shown during the Boxer 
Uprising, she manifested an attitude of friendliness and 
helpfulness, with a view to winning the friendship and 
goodwill of the Chinese and to extending German com- 
merce and kultur in China. By the Tientsin-Pukow 
Railway loan of January 13, 1908,?°“ she gave the best 
terms for railway construction, which have since served 
as the model for other railway construction contracts. 
She inaugurated the project of systematic forestation, 
extending even into the hinterland of Kiaochow.?*® She © 
established high schools and professional schools for 
the spread of German kultur, to which Chinese students 
flocked from all parts of the country. As a result of 
this systematic and deliberate cultivation of Chinese 
friendship, her trade prospered by leaps and bounds, as 
evidenced by the following figures,?° which show that 
from 1902 to 1911 the imports increased tenfold, and 
the exports about twenty. 


Imports (1902 i oceania, 11,078,000 marks 
LOTT Sere an me 114,938,000 “ 

Exports i G02) (vasa toe 4,865,880 “ 
OL ae ina 80,295,000 “ 


This policy of the Open Door and _ friendliness, 
however, was interrupted by the Great War. As is 
well known, Germany at the beginning of the war 
was supplanted in the East by Japan, who occupied 


THE POLICY OF GERMANY IN CHINA 129 


the entire length of the Tsingtau-Tsinan line on Oc- 
tober 6, 1914, and captured Tsingtau on November 7. 
On August 14, 1917, China declared war on Germany, 
terminating all treaty relations.27 By the Treaty of 
Peace signed at Versailles, June 28, 1919 (Arts. 156, 
157, 158), Germany was to renounce in favor of Japan 
all her rights in Shantung, including the lease of Kiao- 
chow, the Tsingtau-Tsinan Railway with the adjoining 
mines, and the submarine cables, thus losing her sphere 
of influence in China. She was further directed to re- 
turn to China the astronomical instruments which she 
had taken during the Boxer Uprising (Art. 131), the 
concessions at Tientsin and Hankow (Art. 132), to re- 
nounce the balance of the Boxer indemnity (Art. 128), 
and to withdraw from the protocol of September 7, 
1901, the tariff arrangement of August 29, 1902, and the 
arrangements of 1905 and 1912 regarding Whampoo. 

After Germany’s passage through the ordeal of war 
and the humiliation of peace, it is interesting to conjec- 
ture what will be her future policy with regard to China. 
Shorn of all rights, she returns to China without a sphere 
of influence, without a base of action, without a settle- 
ment, and without the protection of extraterritorial 
jurisdiction. On the other hand, she has to enter into 
the spheres of influence of other Powers, and compete 
there for her commerce and interests. Under such cir- 
cumstances, she cannot favor the policy of the Closed 
Door, not to say that of partition or control; rather, she 
will favor the Open Door policy. She will desire the 
maintenance of the equal opportunity of trade and the 
preservation of China’s integrity, so that her commerce 
may yet compete with the other Powers now holding 
spheres of influence. We may, therefore, venture the 
conclusion that Germany’s attitude towards China will 
be the same policy of the Open Door and friendliness 
she so splendidly adhered to in the years immediately 
before the outbreak of the Great War.” 


130 POLICIES OF GREAT POWERS IN CHINA 


NOTES TO CHAPTER VII 


1. Patrick Gallagher, America’s Aims and Asia’s Aspirations, 
p. 143; Overlack, Foreign Financial Control in China, pp. 139- 
141; von Bilow’s statement in the Reichstag, April 27, 1898, 
reported in the enclosure of the letter from Sir. F. Lascelles to 
the Marquess of Salisbury—China, No. 1 (1899), Affairs of 
China. 

2. Von Bilow, Imperial Germany, Translation, 1916, pp. 49-50. 

3. The Shantung Question, published by the Chinese National 
Welfare Society in America, March 1, 1920, p. 37. ; 

4. MacMurray, Treaties and Agreements with and Concerning 
China, 1898/4; Hertslet’s China Treaties, Vol. I, No. 59, p. 350 
et seq.; The Shantung Question, op. cit, App. No. 1 to Vol. 2, 
pp. 47-50. 

5. Overlack, op. cit., pp. 139-140, von Bulow’s statement in 
the Reichstag, April 27, 1898, reported in the enclosure of the 
letter from Sir F. Lascelles to the Marquess of Salisbury—China, 
No. 1 (1899), Affairs of China. 

6. Von Bilow’s Imperial Germany, Trans., 1916, p. 117. 

7. Morse, The International Relations of the Chinese Empire, 
Vol. 3, p. 309. 

8. MacMurray, 1900/5; Asakawa, The Russo-Japanese Con- 
flict, pp. 160-161. 

9, London Times, March 16, 1901, quoted in S. Tomimas, The 
Open Door Policy and the Territorial Integrity of China, p. 80 
et seq.; Asakawa, op. cit., p. 103. 

10A. W. R. Thayer, Life of John Hay, Vol. 2, p. 248, letter 
to Henry Adams, Nov. 21, 1900; Morse, op. cit., Vol. 3, p. 328. 

10B. Asakawa, op. cit., pp. 160-161. 

11. Morse, op. cit., Vol. 3, p. 366; China, No. 3 (1902), No. 
22, Baron Eckardstein to the Marquess of Lansdowne, pp. 6-7. 

12. Ibid., Vol. 3, p. 366; July 30-Nov. 16, 1902, China, No. 3, 
1902, also No. 26, No. 31, No. 41. 

13. Ibid., Vol. 3, p. 266, 

14. Vide supra, Chapter on the International Struggle for Con- 
cessions. : 
_15. MacMurray, 1916/2. MacMurray, 1898/3. The codpera- 
tion of her financial agents with those of Great Britain in the 
Anglo-German loans of March 23, 1896, and of March 1, 1898, 
was due more to the exclusion of German interests from the 
Russo-Chinese Bank than to any free and voluntary desire for 
cooperation growing out of similarity of policy. 

16. U. S. For. Rel., 1905, p. 1. 

17. MacMurray, 1911/5. 

18. MacMurray, 1911/2. 

19A. MacMurray, 1913/5. 

19B. Hornbeck, Contemporary Politics in the Far East, p. 297. 

20. The Shantung Question, op. cit., pp. 54-56. 


THE POLICY OF GERMANY IN CHINA 131 


21. MacMurray, 1899/2. 
ae MacMurray, 1900/4; The Shantung Question, op. cit., pp. 
23. MacMurray, 1913/16. 
24. MacMurray, 1898/4. 
25A. MacMurray, 1908/1. 
25B. Hornbeck, op. cit., p. 297. 
26. Gallagher, op. cit., p. 144. 
27. The Shantung Question, op. cit., pp. 64-65. 
28. Dr. O. Frank, Deutschland und China vor, in und nach 
dem Kriege, 1915, p. 17. 


MOLLY ean 
THE POLICY OF GREAT BRITAIN IN CHINA 


THE policy of Great Britain in China is mainly com- 
mercial. It aims primarily at trade predominance. Dur- 
ing the first period of the diplomatic history of China, 
she directed her policy toward the opening of China and 
the settlement of satisfactory diplomatic intercourse at 
Peking. During the second period when the other Powers 
were snatching one dependency after another from China, 
although she seized Burma and Sikkin as a counter-move 
to French acquisition in Burma and Tonkin, she pursued 
more or less a policy of laissez faire, giving the fullest 
measure of liberty to private initiative and refraining © 
herself as far as possible from political or territorial en- 
croachment, thus cultivating the good will of the Chinese 
and winning trade predominance. When during the third 
period the international struggle for concessions came on 
—a struggle resulting in the establishment of spheres of 
influence—Britain, unable to check the general move- 
ment for the spoliation of China, was compelled to join 
in the scramble for concessions and in the demarcation 
of as large a sphere of influence as possible for herself. 
This she did by exacting from China the Declaration - 
of Non-Alienation respecting the Yangtze Valley and 
by entering into agreements with other Powers, pledging 
herself to recognize their respective spheres of influence, 
—with France in 1896,1 with Germany in 1898,? with 
Russia in 1899* and 1907,4 and with Japan in 1902, 
1905,° and 1911.7 

As a commercial power, she naturally favors the Open — 
Door doctrine in China. It is to her advantage that China 
shall remain as wide open as possible for the trade of 

132 


PoricyY OF GREAT BRITAIN; IN CHINA: 133 


the world; on the other hand, it is to her disadvantage 
to have China cut up into closed spheres of influence or 
partitioned. For while she is not anxious to take on any 
more territorial responsibilities, she does desire to see 
her trade spread and predominate in the markets of 
China. 

When the battle of concessions commenced toward the 
close of the last century, threatening the very integrity 
of China, she was therefore most anxious to proclaim a 
doctrine like the Open Door, guaranteeing the equal op- 
portunity of trade and upholding the integrity of China. 
The debates in the House of Commons at that period 
were filled with utterances for the Open Door. Lord 
Charles Beresford, returning from China to Great Britain 
by way of the United States, preached enthusiastically 
the maintenance of the Open Door in China. 

The policy of Great Britain was at that time set forth 
by Sir W. V. Harcourt in his speech in Parliament on 
April 29, 1898: § 


“, . . I think I should be accurately stating the princi- 
ples of policy at which the Government aimed under the 
following heads: they were stated by several ministers 
of authority, and notably by the Right Honorable Gentle- 
man, the Leader of the House, in the early part of the 
year. I shall say that these principles were to oppose, 
for ourselves and for others, territorial occupation, which 
would necessarily lead to the dismemberment of the 
Chinese Empire; and, secondly, that there was to be the 
principle of the Open Door, by which freedom of access 
for the commerce of Great Britain, under the Treaty of 
Tientsin, and other nations, should be maintained and | 
preserved in China. Thirdly, there was to be no acknow!- 
edgement of claims to special spheres of influence for 
particular governments and states, but equal rights 
should be claimed and exercised everywhere ... ” 


Anxious as she might be to sponsor the Open Door 
doctrine, she found that she herself was stained with the 


134. POLICIES OF GREAT POWERS IN CHINA 


spoliation of China and the establishment of the sphere 
of influence in the Yangtze, and could not consistently 
preach a doctrine which she herself had not been able 
to exemplify. She was therefore compelled, though re- 
luctantly, to let the United States take the honor as well 
as the responsibility of sponsoring and championing the 
doctrine in the Far East. 

Although disqualified to be the sponsor of the doctrine, 
she was, however, most anxious to be a sincere and earn- 
est upholder and supporter of it. Long before the an- 
nouncement of the Open Door doctrine, she had prac- 
ticed it. As soon as she had established herself in Hong 
Kong, she opened that island as a free port to the trade 
of the world. In 1845, when she had secured the British 
settlement in Shanghai, she made it an international set- 
tlement.2 When John Hay sent his circular note of 
September 6, 1899, proclaiming the Open Door policy in 
China, Great Britain was the first to reply in favor.*° On 
October 16, 1900, she entered the Anglo-German agree- 
mtent with Germany affirming the Open Door and up- 
holding the integrity of China, which was sent to the 
several powers. Later, against the Manchurian Conven- 
tion of 1900-1902 and the Seven Articles of Russia in 
1903, in conjunction with Japan and the United States, 
she entered vigorous protests. Failing in diplomatic 
representations, she entered into an alliance with Japan 
in 1902, upholding the Open Door and the integrity of 
China, and directed primarily at the Russian advance in 
North China. Her subsequent renewal of the alliance in 
1905 and 1911 all reaffirmed the principles of the Open 
Door doctrine.*2 Her recent wholehearted support of the 
New International Banking Consortium, and especially 
her rejection of Japan’s reservation regarding South 
Manchuria and Eastern Inner Mongolia, again evidenced 
her true desire and intention to follow the Open Door 
doctrine.** 

Her adherence to the Open Door doctrine was, how- 


POLICY OF GREAT BRITAIN IN CHINA 135 


ever, seriously handicapped, and in some instances, even 
compromised by her alliance with Japan in 1905 and 
1911. In exchange for the Japanese protection of her 
interests in China and India, she was constrained to give 
to Japan the recognition of paramountcy over Korea, 
leading to the annexation of that unhappy land in 1910, 
and a free hand and special interests in South Manchuria, 
resulting in the closing, partial at least, if not complete, 
of South Manchuria to the trade of other nations, and 
paving the way for the territorial expansion of Japan in 
that region. In the Shantung question, while sympathy 
might be given for the hard circumstances under which 
the secret pledge was wrested from Great Britain during 
the critical days of her life and death struggle in Europe, 
she was compelled to support Japan, though much 
against her will, and in apparent contravention of the 
Open Door doctrine, and in violation of her own sense 
of justice and right. Mention must, however, be made 
that not to an unappreciable measure has the alliance 
exercised a restraining influence on Japan, as evidenced 
by the Nanking incident when, on account of the killing 
of some Japanese, Japan proposed to make war on China, 
thus taking advantage of the revolution to strangle the 
republic in the cradle. This was, however, nipped at 
the bud by the British counsel of moderation.* 


Though compromising at times and yet still upholding 
the Open Door doctrine as far as possible, the financial 
activity of Great Britain in China became more and more 
cosmopolitan and international. Having learned the les- 
sons of ruinous competition, she was almost always in 
favor of eliminating competition by international codpera- 
tion, thus incidentally asserting the principle of equal op- 
portunity. She cooperated with Germany in the Tientsin- 
Pukow Railway, with French interests in the Pukow- 
Sinyang Railway, and with Germany, France and the 
United States in the Hukuang Railway, thus admitting 


136 POLICIES OF GREAT POWERS IN CHINA 


foreign interests into the Yangtze Valley, which was re- 
garded as her exclusive sphere of influence. With re- 
spect to administrative loans, remembering the tragic ex- 
perience she had in Egypt resulting in final bankruptcy 
and foreign control, she was determined not to favor any 
single nation’s financing China for administrative re- 
organization, but was strongly in favor of having the ad- 
ministrative loans shared by the powers, on the basis of 
equality, if possible, and financed by the banking institu- 
tions supported by the governments interested. In other 
words, she favored the policy of the internationalization 
of loans, as evidenced by the following letter of the For- 
eign Office to Lord Balfour of Burleigh: * 


“Tn regard to the first point raised in that letter, namely, 
the question of the advisability of internationalizing 
loans in China, I am to inform your Lordship that Sir 
E. Grey is unable to concur in the statement that it is 
not in the interests of Great Britain to agree to such an 
arrangement. On the contrary, His Majesty’s Govern- 
ment and the other governments concerned have, from 
the experience of past years, come to the unanimous con- 
clusion that, both in the interests of their own financiers 
and investing public, and also as a safeguard of China’s 
credit, it is incumbent on them to prevent, as far as lies 
in their power, all possibility of a return to the former 
dangerous policy of unprofitable international competi- 
tion in China which only enabled the Chinese Government 
to obtain money without adequate guarantee and rendered 
it impossible for the governments interested to exercise 
the necessary control over the terms of any loans. There 
can be no doubt that the internationalization of future 
loans would go far to secure this desirable end.” 


Further, for fear of extravagance and corruption on 
the part of the Chinese officials, she was quite insistent 
on the necessary supervision over the proper expenditure 
of the proceeds of the loans, as evidenced by the follow- 
ing extracts: 


POLICY OF GREAT BRITAIN IN CHINA 137 


“T am to add that, as a matter of principle, His Maj- 
esty’s Government would not feel justified in ordinary 
circumstances in giving their support to any loans which 
did not, in their opinion and in the opinion of the other 
governments concerned, offer adequate guarantees for 
the proper and useful expenditure of the proceeds, and 
the satisfactory security for the payment of principal and 
anterest.’” 1° 


6é 


. . . It was also explained to Mr. Crisp that as a 
matter of general principle, His Majesty’s Government 
would never support a loan concluded without adequate 
guarantees for the control of the expenditure of the 
proceeds and without proper security ... 71" 


Thus far we have seen that the policy of Great Britain 
is mainly commercial and financial. Let us now turn 
and examine the political side of her policy. Burdened 
with the crushing weight of colonial responsibilities ex- 
tending throughout the world, she is no longer anxious 
for territorial gains. This principle is convincingly set 
forth in the following statement of Bonar Law made in 
the House of Commons on November 27, 1911:1°4 


“He (the Rt. Hon. Gentleman) pointed out quite truly 
that we do not desire to extend our Empire further... . 
I say without any: hesitation that we do not desire acces- 
sions of territory, and in saying that I am not speaking 
for one small section of the house. I believe that I am 
speaking for the nation at large. We do not desire acces- 
sions of territory. Our responsibilities are great enough 
already. .. . Our one desire, our one ambition, is not 
to enlarge, but to build up our Empire.” | 


“The only limitation of this principle is an obvious one. 
There are certain places lying next to British possessions 
or perhaps strategically commanding important British 


routes,’ which Great Britain cannot see pass into other 
hands,18® 


138 POLICIES OF GREAT POWERS IN CHINA 


In spite of her disinterestedness, however, when the 
international struggle for concessions commenced, she 
was confronted with the problem of either abstaining 
from the general scramble, or of joining the Powers. 
She could not, and probably would not, abstain from the 
general scramble, for that would give advantage to her 
rivals, thus upsetting the balance of power. She was, 
therefore, compelled to resort to the policy of participa- 
tion. But even in joining the scramble, she seldom took 
the initiative, but she always acted, as a defensive meas- 
ure, to compensate her own loss or to restore the over- 
turned balance of power. It is regrettable to mention 
that, by thus participating in the scramble, the leading 
commercial power in the Far East, as she is, disqualified 
herself from being the sponsor of the Open Door doc- 
trine and the moral leader among the powers in China. 

In this contest for concessions she directed her policy 
mainly against Russia and France from 1895 to 1904. 
Rivaling the Franco-Russian loan of 400,000,000 francs 
in 1895, in partnership with the German interests, she 
advanced the loans for the rest of the installments for 
the indemnity to Japan.*® Competing with the French 
gain in territory on the Tonkin frontier and the rail- 
way extension into Yunnan, she secured territorial 
advantages on the Burmese frontier, and the exten- 
sion of the Indo-Burmese line to the head of the 
navigable waters of the Yangtze.2°* Suspicious of the 
ulterior intention of the French fleet hovering near 
the mouth of the Yangtze River,?°® and fearing, in 
the words of Sir Claude M. MacDonald, British Min- 
ister in Peking at that time, “to find one morning that 
by reason of the murder of a foreign subject or the re- 
fusal of some demand by a foreign power, some place on 
the Yangtze has been seized and was to be retained in a 
99 year’s lease,” *4 she quietly obtained from China, as 
a guarantee of her own sphere of influence, the declara- 
tion of non-alienation of the Yangtze Valley.2? As a 


POLICY OF GREAT BRITAIN IN CHINA 139 


protection against the French occupation and fortifica- 
tion of Kwangchow-wan, she obtained the extension of 
the Hong Kong territory.** As a check against the Rus- 
sian occupation of Port Arthur which she resented most 
vehemently, she obtained the lease of Weihaiwei, “‘for so 
long a period as Port Arthur shall remain in the occupa- 
tion of Russia,’ ** thus evidently showing the intention 
of the lease.*® Forestalling the Russian design as to the 
office of the Inspector-General of the Chinese Maritime 
Customs, she procured the declaration from the Chinese 
Government that a Britisher should be appointed, while 
British trade predominated.?® Likewise, in the contest 
for railway concessions, to hold the Russian advance at 
arm’s length from Peking, she interposed her own in- 
fluence by the construction of the Peking-Newchuang 
line. To counterbalance the Belgian concession for the 
Peking-Hankow Railway, backed by Russia and France, 
and to penalize China for breach of faith in admitting the 
participation of the Russo-Chinese Bank in the Peking- 
Hankow deal, by diplomatic pressure and the display of 
naval power, she obtained the concessions for the Tient- 
sin-Chinkiang, the Pukow-Sinyang, the Soochow-Hang- 
chow-Ningpo, the Shanghai-Nanking, the Canton-Kow- 
loon and Peking-Newchuang Railways, totaling 2,800 
miles.27_ Finally, directed primarily against the Russian 
advance in Manchuria, she concluded the alliance with 
Japan in 1902, thus making it possible for Japan to fight 
Russia in 1904-5 without the participation of France. 
With respect to Tibet, the British policy as related to 
Russia was further illustrated. As in 1900 the Dalai 
Lama sent a mission to the Czar and later despatched a 
second mission under the headship of a Russian, Great 
Britain was aroused to the menace of Russia’s treacher- 
ous advance on India,—the jewel of the British posses- 
sions. For breach of treaty obligations as stipulated in 
the trade regulations of 1893, the expedition of Colonel 
Younghusband to Tibet was sent in 1903, and on Septem- 


140 POLICIES OF GREAT POWERS IN CHINA 


ber 7, 1904, the treaty with Tibet was signed.** British 
consent was to be obtained before making territorial con- 
cessions to other foreign powers (Art. 9-a). No other 
foreign power should intervene in Tibetan affairs (Art. 
9-b), or send representatives or agents into Tibet (Art. 
9-c). No commercial concessions should be granted with- 
out similar and equivalent concessions being given to the 
British (Art. 9-d). No Tibetan revenues should be 
pledged to any foreign power (Art. 9-e). On April 27, 
1906, by the Convention with China,”® she promised not 
to annex Tibetan territory nor interfere with the adminis- 
tration of the country (Art. 2), while making China 
pledge that she would not permit intervention in Tibet by 
any other power (Art. 2). From 1912 to 1915, however, 
when the British saw that, by the various conventions, 
Russia had established her joint suzerainty over outer 
Mongolia, she was thereby impelled to follow suit and 
demanded similar privileges regarding Tibet. On July 
3, 1914,°° a tripartite agreement was reached between 
China, Tibet and India. ‘Tibet was divided into Inner 
and Outer Tibet. It was to form a part of Chinese terri- 
tory and to be under Chinese suzerainty, but the autonomy 
of Outer Tibet was to be recognized. China and Great 
Britain were to abstain from interference in internal ad- 
ministration. China pledged not to convert Tibet into 
a province nor will Outer Tibet be represented in the 
Chinese Parliament. China was to send no troops, no 
civil officers, nor colonizers to Outer Tibet. All these pro- 
visions tend to indicate that Great Britain would advance 
there in exactly the same way that Russia would in 
Mongolia. This convention, however, was not ratified 
by the Chinese Government, which would not admit 
Chinghai or Kokonor, south of the Altun-tag Mountains, 
or north of the Tangla Range as part of Outer Tibet, 
Batang and Litang in Szechuan as part of Inner Tibet, 
and a small part of Sinkiang beyond Kuenlung Moun- 
tains as part of Outer Mongolia.*4 


POLICY OF GREAT BRITAIN IN CHINA 141 


After the Russo-Japanese War, however, when Russia 
had been checked, Great Britain changed the objective 
of her policy. A new menace had arisen against her, and 
that was the rising power of Germany. Formerly in the 
contest against Russia only her interests in the Far East 
were threatened, but now her very existence was menaced. 
The rapid naval construction and the weltpolitik of the 
Kaiser challenged her naval supremacy, the preservation 
of which was the cardinal principle of the British policy. 

To face this growing menace, she had not only to ex- 
pand her navy as far as her resources would allow her, 
but also to come to an amicable understanding with her 
old friends, and become reconciled with some of her old 
enemies. She therefore entered into the Hay-Paunce- 
fote Treaty with the United States in 1901, nullifying 
the Clayton-Bulwer Treaty of 1850, removing the source 
of friction with the United States by an amicable settle- 
ment of the Panama Canal question, much to the satis- 
faction of the United States, at the same time withdraw- 
ing her fleet from the West Indies for concentration in 
the North Sea, thus leaving the United States supreme 
in the West Indies.** In 1904 she entered into an entente 
with France, formerly her rival, admitting French in- 
terests into the Yangtze Valley and withdrawing her fleet 
from the Mediterranean to the North Sea, leaving the 
British interests there to the protection of France. In 
1905 she renewed the alliance with Japan, this time pledg- 
ing to help in war whenever either party should be in- 
volved, and at the same time withdrawing her Pacific 
fleet from the Pacific and Indian Oceans for concentration 
in the North Sea, and leaving British interests in China 
and India to the protection of Japan. In 1907 she con- 
cluded an agreement with her once bitterest enemy, Rus- 
sia.** Besides a division of sphere of influence in Persia 
and an understanding relating to Afghanistan, she agreed 
with Russia on the question of Thibet that they would 
mutually respect the integrity of the same (Art. 1), ab- 


142 POLICIES OF GREAT POWERS IN CHINA 


stain from all interference in internal administration 
(Art 2), seek no economic concessions (Art. 4), send no 
representatives to Llassa (Art. 3), deal with the state 
exclusively through the Government of China, its suzerain 
(Art. 2), and “agree that no part of the revenues of 
Thibet, whether in kind or in cash, shall be pledged or 
assigned to Great Britain or Russia or to any of their 
subjects’) CArt. 5,7" 


Comment must be made, in passing, that the policy of 
Great Britain in China was characterized in a marked 
degree by justice and fair play. A British subject occu- 
pies the office of Inspector-General of the Chinese mari- 
time customs only while her trade predominates.** This, 
of course, means that, to continue to hold the position, she 
must enter into commercial competition and win pre- 
dominance. In other words, she holds the office, as long 
as she remains the champion in the field of China’s for- 
eign trade; conversely, the moment she loses the cham- 
pionship, she loses therewith the post of Inspector-Gen- 
eral. In fact, it was specifically agreed that “if at some 
future time the trade of some other country at the various 
Chinese ports should become greater than that of Great 
Britain, China will then, of course, not be bound to neces- 
sarily employ an Englishman as Inspector-General.” *° 
As a corollary of this sportsman-like arrangement it is 
thought by some powers that under the most favored na- 
tion treatment, when Great Britain loses her trade pre- 
dominance, whatever power gains the commercial ascend- 
ency can likewise claim the post of Inspector-General. 
Again, in the Mackay Treaty of 1902, though the honor» 
must also be equitably shared with the United States and 
Japan which entered into similar treaties in 1903, she 
was the first power to concede the surrender of the extra- 
territorial jurisdiction upon satisfactory judicial reform 
on the part of China, and also the increase of the import 
tariff to not more than 12 1-2 per cent and the export 


POLICY OF GREAT BRITAIN IN CHINA 143 


tariff to not more than 7 1-2 per cent in return for the 
abolition of likin, upon the unanimous consent of all the 
powers enjoying, and that may enjoy, the most favored 
nation treatment, and upon the obtainment of the said 
consent without the grant of any political concession or 
exclusive commercial privileges. 

Further, in the agreement of January, 1908,°7 Great 
Britain pledged to reduce the importation of opium by 
one-tenth every year for a period of ten years, beginning 
with 1908, provided the Chinese Government would re- 
duce the production and consumption of native opium in 
China in the meantime in the same ratio, and also agreed 
that this ten-year agreement was to last for three years, 
at the end of which time, if the Chinese Government 
should have faithfully executed its obligations, the agree- 
ment would be extended until the completion of the whole 
period of ten years, in 1917. Accordingly, at the end of 
the three years, when the Chinese Government was found 
to have faithfully done its part of the obligation, on 
May 8, 1911,°° she entered into a further agreement 
pledging to continue the previous convention of January, 
1908, and to agree 


“that the export of opium from India to China shall 
cease in less than seven years if clear proof is given of 
the complete absence of production of native opium in 
China” (Art. 2), and “that Indian opium shall not be 
conveyed into any province in China which can establish 
by clear evidence that it has effectively suppressed the 
cultivation and the import of native opium” (Art. 3). 


Subsequently, when the Chinese Revolution and the 
civil war had caused either the relaxtion of the efforts in 
suppression or the revival of the cultivation of native 
opium, she generously overlooked the fault and faith- 
fully adhered to her previous agreements. Thus, by a 
repentance of heart and earnest cooperation in the sup- 
pression of the opium evil, she obliterated the one damag- 


144 POLICIES OF GREAT POWERS IN CHINA 


ing blot on her fair name and removed the great cause 
of grudge cherished by the Chinese ever since the Opium 
War of 1840-42. 

There were, however, instances when her sense of jus- 
tice and fair play was carried to excess, resulting in a 
disregard of the popular sentiment of the Chinese, and 
the unwise assertion of the superiority of a ruling race. 
In the case of the Shanghai-Hangchow-Ningpo Railway, 
for instance, the people of the region traversed by the 
line had already collected the funds and brought the line 
almost to completion, when the British insisted on their 
rights based on the grant of 1898, and forced a loan on 
the Chinese Government in 1908.*° 


Such being her policy, let us now speculate as to her 
probable future course in China. Her traditional adher- 
ence to the Open Door doctrine and her present participa- 
tion in the New International Banking Consortium indi- 
cate that she will return to China with a new zeal and 
determination to uphold the principles of the equal op- 
portunity of trade and the integrity of China. Her pur- 
suance of this policy will, however, depend upon two 
contingencies. The first depends upon whether the New 
Consortium will succeed or not. If it succeeds, it means 
the assurance of American leadership in the affairs of 
China, and consequently the maintenance of the Open 
Door doctrine, in which case she will be able to uphold 
it, and also incidentally continue her old policy of the 
internationalization of loans and the proper supervision 
of the expenditure of the proceeds of the loans. But 
if the New Consortum should fail, it would mean the 
loss of American leadership in the Orient, and conse- 
quently the breakdown of the Open Door, in which case 
she would not be able to check the general struggle for 
concessions in China, but would be compelled to join 
in the scramble as she did in 1898, 1908 and 1913-14.1° 


POLICY OF GREAT BRITAIN IN CHINA 145 


The other contingency is the Anglo-Japanese Alliance 
now waiting for renewal. Should she renew the alliance 
in its old form, which is not expected, she would have to 
overlook Japan’s attack on her interests in the Yangtze 
Valley in 1915, as evidenced by the Twenty-one Demands, 
and Japan’s unfaithfulness during the war as evidenced 
by the press attack after the failure to impose Group V 
on China, and also the secret alliance with Russia of 
1916.** She would also have to compromise her Open 
Door principles, in exchange for the Japanese protection 
of British interests in China and India, by giving Japan 
a free hand in South Manchuria and Eastern Inner Mon- 
golia, if not in the whole of Manchuria and Mongolia in 
view of the temporary ebb of Russian influence in these 
regions, and also probably in the whole of North China 
because of Japan’s succession to the former German 
rights in Shantung. She would further be obligated, un- 
less otherwise provided, to support Japan, as against 
China in the League in the Shantung question and the 
abrogation of the Treaties of May 25, 1915, which obli- 
gation would seriously disable her from a frank and im- 
partial judgment, when China, as is expected, might bring 
up these questions for reconsideration. Further, she 
would have to suffer loss in the favor of the nations with 
which Japan had causes of friction, such as the United 
States, China, Siberia and Australia, unless she could 
obtain immunity from such a liability and reserve her 
own freedom of action by an exemption from the obliga- 
tion to assist Japan, either in war or in diplomacy, or, in 
both, in case of a conflict of Japan with either of these 
powers. On the other hand, should she discontinue the 
alliance in toto, she would be confronted with Japanese 
resentment. This would be almost inevitable, in view of 
Japan’s anxiety to save herself from diplomatic isolation 
and to forestall the eventuality of the reconsideration of 
the Shantung question and the cancellation of the 1915 
treaties. This would surely manifest itself in hostile 


146 POLICIES OF GREAT POWERS IN CHINA 


fomentation of rebellions in India and Egypt and other 
territories, if not in entering into alliance with the enemies 
of Great Brigain. 

Thus Great Britain is confronted with a most delicate 
and serious diplomatic problem, upon the decision of 
which hangs the future of her policy in China. It is, 
however, expected that she will find a way out, by which, 
on the one hand she can restrain Japan from any tendency 
to create opposition or to foment rebellions, and yet, 
on the other hand, she can uphold the Open Door doctrine 
in China and avoid conflict, because of Japan, with the 
powers bordering on the Pacific.*? 


NOTES TO CHAPTER VIII 


1. MacMurray, Treaties and Agreements with and Concern- 
ing China, 1896/1. 
MacMurray, 1900/5. 
MacMurray, 1899/3. 
MacMurray, 1907/16. 
MacMurray, 1902/2. 
MacMurray, 1905/6. 
MacMurray, 1911/7. 
The Parliamentary Debates, Vol. 56, Apr. 4, 1898 to Apr. 29, 
1898, p. 1559 et seq. 

9. Morse, The International Relations of the Chinese Empire, 
Vol. 1, p. 348, 

10. U. S. For. Rel., 1899, Lord Salisbury to Mr. Choate, 
Sept. 29, 1899; same to same, Nov. 30, 1899, pp. 135-136. 

11. State Papers, Vol. 94, p. 1227, The Marquis of Salisbury 
to Sir C. Scott, Aug. 28, 1902. 

12. MacMurray, 1905/6, and 1911/7. 

13. Vide inira, chapters on the New International Banking 
Consortium. 
pls R. R. Gibson, Forces Mining and Undermining China, p. 

15. State Papers, Vol. 106, pp. 328-330, Mar. 4, 1912, signed by 
W. Langley. 

16. State Papers, Vol. 106, 330, For. Off. to Lord Balfour 
of Burleigh, Mar. 4, 1912, afc by W. Langley. 

17. State Papers, Vol. 106, Sir Edward Grey to Sir J. Jordan, 
p. 432, Aug. 23, 1912. 

18A. Parliamentary Debates, 5th Series, Nov.-Dec., 1911, Vol. 
32, pp. 73-74. 

'18B. Gilbert Murray, The Foreign Policy of Sir Edward pica 
1906-1915, p. 48. 


DONID UB Ooty 


POLICY OF GREAT BRITAIN IN CHINA 147 


19. F. H. Huang, Public Debts in China, p. 21 et seq. 

20A. Vide supra, Chapter on the International Struggle for 
Concessions. 

20B. Hishida, the International Position of Japan as a Great 
Power, p. 207; China, No. 1, 1899, pp. 344-347; M. C. Hsu, 
Railway Problems in China, p. 43. 

21. China, No. 1, 1899, No. 20, p. 15. 

22. Hishida, op. cit., p. 200; Parliamentary Papers, China, No. 
2, 1898. 

23. Hertslet’s China Treaties, Vol. 1, No. 24, pp. 120-122; 
State Papers, Vol. 90, pp. 17-18. 

24. Hertslet, No. 25, p. 122; State Papers, Vol. 90, p. 16. 

25. Balfour’s instruction to Sir F. Lascelles, British Am- 
bassador at Berlin, April 2, 1898: “You should inform the 
German Government, pointing out to them that the action of 
Russia forces this step on us. Its sole object is to maintain the 
balance of power in the Gulf of Pechili, which was menaced by 
Russia’s occupation of Port Arthur. We do not anticipate this 
policy will give any umbrage to German interests in Shantung, 
since it is not possible to make Weihaiwei a commercial port, and 
it would never be worth while to connect it with the peninsula 
by railway.’—China, No. 1, 1899, No. 2, p. 2. 

26. MacMurray, 1898/2. 

27. M. C. Hsu, Railway Problems in China, pp. 39-43; British 
Blue Book, Affairs of China, No. 1, 1899, pp. 344-347, Sir Mac- 
Donald to Lord Charles Beresford. 

~28. MacMurray, 1906/2. 

29. MacMurray, 1906/2. 

30. MacMurray, 1906/2. 

31. H. K. Tong, British and Chinese Government Again Con- 
sidering Tibetan Question, Article in Millard’s Review, June 7, 
1919, p. 5 et seq. 

32. J. H. Latane, From Isolation to Leadership, pp. 120-121. 

33. MacMurray, 1907/16. 

34. Millard, Our Eastern Question, App. N, pp. 459-463; 
Hertslet, Vol. 1, No. 121, pp. 620-622. 

35. MacMurray, 1898/2, Feb. 13, 1898. 

36. MacMurray, 1898/2. 

37. MacMurray, 1911/4; U. S. For. Rel., 1908, p. 80. 

38. MacMurray, 1911/4. 

39. MacMurray, 1908/3, Mar. 6, 1908. . 

40. In fact, it has been reported that she entered into the 
tripartite agreement with France and Japan at the Paris Peace 
Conference, carving China into three great spheres of influence, 
giving to Japan (Eastern Siberia, to beyond Lake Baikal) all of 
China except the regions reserved for France and Great Britain; 
to France, Yunnan, Kwangsi and Kweichou and Western Kwan- 
tung (Indo-China and Tonkin, Eastern Siam and certain rights 
in Syria), and reserving to herself as the British sphere—(India, 
Persia, Arabia, Burma, Palestine, Asia Minor and the Caucassus, 
Western Siam, the Federated Malay States), Tibet, Szechuan, 


148 POLICIES OF GREAT POWERS IN CHINA 


Kwantung, forming the littoral of Hong Kong, and equal com- 
mercial rights in the Yangtze Valley. (T. F. Millard, China’s 
Case at the Peace Conference, Millard’s Review, Supp., July 17, 
1920, p. 18). Should this report be true, then she would be 
prepared to adopt the sphere policy, if the New Consortium 
should fail, as she had done in 1913 and 1914 after the with- 
drawal of the United States from the Sextuple Consortium. 

41. MacMurray, 1916/9. 

42. Millard’s Review, May 29, 1920, pp. 629-634. “In 1920 the 
world seems to be called upon to choose between a liberal policy 
in the Far East and a Japanese policy. Again it is England that 
must make the choice. She will do so when she signifies or 
fails to signify her intention to abrogate or to modify the Treaty 
of Alliance with Japan. The United States has confidence that 
England will make the right choice today as she did in 1902.”— 
Prof. C. F. Remer. 


IX 


HieeeOICY OF THE UNITED SEALTES 
IN -CHINA 


_ THE policy of the United States in China is character- 
ized by unselfishness and friendliness. Quite in vivid 
contrast with the other grasping powers who pounced 
upon China in the general scramble for leases in 1898, 
she kept her hands off and was able to withstand the 
temptation. On the contrary, she sought to uphold 
China’s integrity and sovereignty and save her from par- 
tition. Throughout the negotiation for the settlement 
of the Boxer trouble, she opposed any proposal that 
would threaten to partition China and burden her with 
a load of indemnity that would make her the economic 
vassal of the Powers for years.1 To this effect Li Hung- 
chang, who conducted the negotiation on behalf of the 
Chinese Government, testified:? “I tremble to think of 
what might have been China’s fate but for the stand 
taken by the American Government.” Subsequently, she 
returned part of the Boxer indemnity for the education 
of the young Chinese in America.? Again, in the Cur- 
rency and Industrial Development Loan,* she undertook 
the contract upon the request.of the Chinese Government, 
and to secure international cooperation and harmony, she 
shared it with the other powers and surrendered her 
right to an advisership in favor of the appointment of a 
neutral nationality. Finally, during the Great War, upon 
hearing civil dissension as caused by the controversy 
over entrance into the war on the allied side, President 
Wilson sent a friendly note, on June 5, 1917,° counseling 
the Chinese to compose their factional disputes and to 
establish a united, central and responsible government. 
149 


150 POLICIES OF GREAT POWERS IN CHINA 


Thus briefly characterized, the policy of the United 
States in China is the Open Door Doctrine. When the 
international struggle for leases and concessions com- 
menced in 1897-9, carving China into exclusive spheres 
of influence and thus threatening to close the various 
regions to the trade of the United States, John Hay, 
then Secretary of State, was confronted with a most 
complicated problem. He could not join in the gen- 
eral scramble, for that would be contrary to public 
opinion and to the traditional policy of non-intervention. 
Nor could he remain inactive and permit the doors of 
China to be closed, for, China being such a potentially 
wealthy nation, the United States could not afford to 
lose her share of commerce. His difficult problem and 
his attitude thereto were clearly shown in a contempo- 
TAryuletterse 


€¢ 


... We are, of course, opposed to the dismember- 
ment of that empire, and we do not think that the public 
opinion of the United States woud justify this Govern- 
ment in taking part in the great game of spoliation now 
going on. At the same time we are keenly alive to the 
importance of safeguarding our great commercial inter- 
ests in that empire and our representatives there have 
orders to watch closely everything that may seem cal- 
culated to injure us, and prevent it by energetic and 
timely representations.” 


Thus compelled to act so that the doors of China might 
remain open for the trade of American merchants, he 
sent his first circular note, on September 6, 1899, to 
London, Berlin and St. Petersburg, and on November 13, 
to Tokio, on November 17, to Rome, and on November 
21, to Paris.*. Though wording his notes with some dif- 
ferences to suit the various chancellories, he set forth 
in essence the following proposal: § 


“This Government is animated by a sincere desire that 
the interests of our citizens might not be prejudiced 


POLICY OF UNITED STATES IN CHINA 151 


through exclusive treatment by any of the controlling 
powers within their so-called ‘spheres of interest’ in 
China, and hopes also to retain there an open market 
for the commerce of the world, remove dangerous sources 
of international irritation, and hasten thereby united or 
concerted action of the powers at Peking in favor of 
the administrative reforms so urgently needed for 
strengthening the Imperial Government aad maintaining 
the integrity of China in which the whole western world 
is alike concerned. It believes that such a result may 
be greatly assisted by a declaration by the various powers 
claiming ‘spheres of interest’ in China of their intentions 
as regards treatment of foreign trade therein. The pres- 
ent moment seems a particularly opportune one for in- 
forming Her Britannic Majesty’s Government of the 
desire of the United States to see it make a formal decla- 
ration and to lend its support to. obtaining similar declara- 
tions from the various powers claiming ‘spheres of 
influence’ in China, to the effect that each in its respective 
sphere of interest or influence— 

“First, will in nowise interfere with any treaty port 
or any vested interest within any so-called ‘sphere of 
interest,’ or leased territory it may have in China. 

“Second, that the Chinese treaty tariff of the time being 
shall apply to all merchandise landed or shipped to all 
such ports as are within said ‘sphere of interest’ (unless 
they be ‘free ports’), no matter to what nationality it may 
belong, and that duties so leviable shall be collected by 
the Chinese Government. 

“Third, that it will levy no higher harbor dues on 
vessels of another nationality frequenting any port in 
such ‘sphere’ than shall be levied on vessels of its own 
nationality, and no higher railroad charges over lines, 
controlled or operated within its sphere on merchandise 
belonging to citizens or subjects of other nationalities 
transported through such ‘sphere’ than shall be levied 
on similar merchandise belonging to its own nationals 
transferred over equal distance.” 


To this note all the Powers addressed replied in favor, 
generally with the reservation that the other Powers 


152 POLICIES OF GREAT POWERS IN CHINA 


should concur, and with the exception, however, of Rus- 
sia, who was significantly silent on the uniformity of 
harbor dues and railroad charges. On March 20, 1900, 
having received all the replies, John Hay informed the 
Powers that 


“the condition originally attached to its acceptance... 
that all other powers concerned should likewise accept 
the proposals of the United States . . . having been com- 
plied with, this Government will therefore consider the 
assent given to it by : as final and defini- 
tiveR 


Interpreting the doctrine as formulated by John Hay, 
we can safely say that the first principle of the Open 
Door policy is the equal opportunity of trade. As postu- 
lated by John Hay, this equal opportunity of trade is 
to be obtained by the maintenance of the Chinese treaty 
tariff for the time being whose collection at the treaty 
ports is to be left in the hands of the Chinese Govern- 
ment, which means, of course, uniformity of tariff and 
the equal treatment of foreign merchants of whatever 
nationality with respect to importations and exportations. 
Further, it is to be maintained by the uniform levy of 
harbor dues and railroad charges, which means the equal 
treatment of all nations in the matter of transportation. 

This principle of equal opportunity of trade does not 
preclude the existence of spheres of influence. In fact, 
the sphere of influence was quite clearly implied and 
recognized in the correspondence of John Hay for the 
establishment of the Open Door Doctrine. Each govern- 
ment addressed was requested to make a declaration in 
favor of the application of the three provisions as stipu- 
lated by John Hay “in its respective spheres of interest or 
influence.” ?+_ The first of the three provisions was that 
each government in its respective sphere would in nowise 
interfere with any treaty port or any vested interest 
within any so-called “sphere of interest” or leased ter- 


POLICY OF UNITED STATES IN CHINA 153 


_ritory it might have in China, thus definitely recognizing 
spheres of interest. The British reply ?? specifically stated 
that 


“Her Majesty’s Government will be prepared to make a 
declaration in the sense desired by your Government in 
regard to the leased territory of Weihaiwei and all terri- 
tories in China which may hereafter be acquired by Great 
Britain by lease or otherwise, and all spheres of interest 
now held or that may hereafter be held in China. . .” 


to which John Hay did not make any exception or objec- 
tion. In subsequent history, when Great Britain put her 
mantle of influence over Tibet in 1906 ** and Russia over 
Outer Mongolia in 1913 and 1915,1* and when France 
secured the declaration from the Chinese Government for 
a preference in railroad and mining enterprises in 
Kwangsi in 1914, the United States Government was 
not reported to have lodged any protest ; and in 1915 when 
Japan made Eastern Inner Mongolia her sphere of influ- 
ence and South Manchuria virtually her exclusive pre- 
serve, the United States Government, while making a 
general declaration reaffirming the Open Door policy and 
reserving the right of exception to any agreements be- 
tween China and Japan contrary to the principles of the 
Open Door or the treaty rights of the United States, did 
not make any specific representations of protest against 
the provisions regarding Eastern Inner Mongolia and 
South Manchuria. 

What John Hay opposed was, not the existence of 
spheres of influence which had already existed before 
the enunciation of his doctrine, but rather the closing of 
the spheres to the trade of the world or the assertion of 
claims to exclusive rights within the spheres. The three 
provisions as postulated by John Hay were designed 
to keep the doors open in the various spheres through 
the recognition of vested interests and the maintenance 
of the Chinese treaty tariff and the uniformity of har- 


154 POLICIES OF GREAT POWERS IN CHINA 


bor dues and railway charges; in other words, they were 
to secure the equal treatment of foreign merchants within 
the various spheres. In his original note to Mr. Choate, 
United States Ambassador at London,'* John Hay said: 


“While the Government of the United States will in 
nowise commit itself to a recognition of exclusive rights 
of any power within or control over any portion of the 
Chinese empire under such agreements as have within 
the last year been made, it cannot conceal its apprehen- 
sion that under existing conditions there is a possibility, 
even a probability, of complications arising between the 
treaty powers which may imperil the rights insured to 
the United States under our treaties with China.” 


Again, in his protest against the proposed convention 
between China and Russia respecting Manchuria, he 
wrote: 7" 


“An agreement by which China cedes to any corpora- 
tion or company the exclusive right and privilege of 
opening mines, establishing railroads, or in any other 
way industrially developing Manchuria, can but be viewed 
with the gravest concern by the United States. It con- 
stitutes a monopoly, which is a distinct breach of the 
stipulations of treaties concluded between China and for- 
eign powers, and thereby seriously affects the rights of 
American citizens; it restricts their rightful trade and 
exposes it to being discriminated against, interfered with, 
or otherwise jeopardized, and strongly tends toward per- 
manently impairing the sovereign rights of China in this 
part of the empire, and seriously interferes with her 
ability to meet her international obligations. Further- 
more, such concessions on the part of China will un- 
doubtedly be followed by demands from other powers for 
similar and equal exclusive advantages in other parts 
of the Chinese Empire, and the inevitable result must be 
the complete wreck of the policy of absolute equality 
of treatment of all nations in regard to trade, naviga- 
tion and commerce within the confines of the Empire.” 


POLICY OF UNITED STATES IN CHINA 155 


Subsequently, when in 1903 Russia demanded, in her 
Seven Articles, as conditions for the further evacuation 
of Manchuria,® that without the consent of Russia no 
new treaty port be opened or consuls admitted (Art. 3), 
and no foreigners, except Russians, be employed {in 
the public service of North China, thus extending author- 
ity over the affairs of North China, John Hay protested 
against the exclusion of other foreigners from public 
service in North China, and as a measure of upholding 
the Open Door in Manchuria, demanded the opening of 
treaty ports in that region.1® As a consequence, and in 
conjunction with the Treaty of Commerce signed on Oc- 
tober 8, 1913, Mukden and Antung in Manchuria were 
opened to trade (Art. 12), thus successfully asserting 
the Open Door doctrine and preventing Manchuria from 
being closed to the trade of the world. 


Thus the first principle of the Open Door policy, as 
we have seen, is the equal opportunity of trade within 
the various spheres of influence. Now let us consider 
the second principle of the doctrine, which is equally 
as important, if not more so: namely, the integrity of 
China. In the first circular note of September 6, 1899, 
John Hay did not make the preservation of the integrity 
of China the primary object of his policy. What we 
can gather from a close scrutiny of his correspondence 
was that the integrity of China was to him an implied 
condition of his policy, or a presumed prerequisite for 
the successful operation of his policy. For should China 
be partitioned or should the spheres of influence grow 
into regions of foreign control, there would be a con- 
sequent closing of the various regions and there would 
thus be no room and no necessity for the Open Door 
Doctrine. Quite in line with this reasoning, John Hay 
said, in his first circular note: 74 


“This Government . . . hopes also to retain there an 
open market for the commerce of the world, remove 


156 POLICIES OF GREAT POWERS IN CHINA 


dangerous sources of international irritation and hasten 
thereby united and concerted action of the Powers at 
Peking in favor of the administrative reforms so urgently 
needed for strengthening the Imperial Government and 
maintaining the integrity of China... .” 


“The declaration of such principles . . . would give 
additional weight to the concerted representations which 
the treaty powers may hereafter make to His Imperial 
Chinese Majesty in the interest of reform in Chinese 
administration so essential to the consolidation and in- 
teorityy Of Mhereiapine, 9. une ye 


Besides, the the second provision of his proposal was 


“that the Chinese treaty tariff of the time being shall 
apply to all merchandise landed or shipped to all such 
ports as are within said ‘sphere of interest’ (unless they 
be ‘free ports’), no matter to what nationality it may 
belong, that duties so leviable shall be collected by the 
Chinese Government.” 


This provision of requiring the maintenance of the 
Chinese treaty tariff and of collection thereof by the 
Chinese authorities presupposes the existence of the sov- 
ereignty and integrity of China. 

During the Boxer Uprising, when China was threat- 
ened with the peril of dismemberment, John Hay brought 
to the forefront the second principle of his doctrine, the 
integrity of China: 


“The policy of the Government of the United States 
is to seek a solution which may bring about permanent 
safety and peace to China, preserve Chinese territorial 
and administrative entity, protect all rights guaranteed 
to friendly powers by treaty and international law and 
safeguard for the world the principle of equal and im- 
partial trade with all parts of the Chinese Empire.” 8 


In his reply to Great Britain concerning the Anglo- 
German agreement of October 16, 1900, he placed an 


- 


POLICY OF UNITED STATES IN CHINA 157 


-emphasis on the principle of the integrity of China equal 
to that of equal opportunity of trade: 


“During the last year this Government invited the 
Powers interested in China to join in an expression 
of views and purposes in the direction of impartial trade 
with that country and received satisfactory assurances 
to that effect from all of them. When the recent troubles 
were at their height, this Government, on the third of 
July, once more made an announcement of its policy 
regarding impartial trade and the integrity of the Chinese 
Empire, and had the gratification of learning that all 
the Powers held similar views.” *4 


From this time on, the Open Door policy of the United 
States has been understood to consist of two leading prin- 
ciples: namely, the equal opportunity of trade and the 
integrity of China. In subsequent declarations or agree- 
ments respecting the policy, these two principles are 
always mentioned side by side. In his circular note of 
January 13, 1905, issued in response to the request of 
the then Kaiser, William II, to forestall any territorial 
spoliation of China in consequence of the Russo-Japanese 
War, John Hay said: 


“For its part, the United States . . . has been grati- 
fied at the cordial welcome accorded to its efforts to 
strengthen and perpetuate the broad policy of maintaining 
the integrity of China and the ‘Open Door’ in the Orient, 
whereby equality of commercial opportunity and access 
shall be enjoyed by all nations.” 7° 


In the statements given to the press relating to the 
neutralization plan for the Manchurian railways,?* there 
was found the statement: 


“As is well known, the essential principles of the Hay 
policy of the Open Door are the preservation of the 
territorial and jurisdictional integrity of the Chinese 


158 POLICIES OF GREAT POWERS IN CHINA 


Empire, and equal commercial opportunity in China for 
all nations.” 


In the Root-Takahara agreements, and recently in the 
United States declaration in connection with Japan’s 
Twenty-one Demands, and the Lansing-Ishii agreement, 
the same principles were reiterated and reaffirmed. 


Having thus seen the essential principles of the Open 
Door doctrine, let us analyze the meaning of the integrity 
of China. By the integrity of China may be meant terri- 
torial integrity, or sovereignty, or administrative integ- 
rity. As to the first meaning—the territorial integrity 
of China—there can be almost no dispute. John Hay’s 
circular note of July 3, 1900, clearly referred to the 
preservation of territorial integrity: 


“The policy of the Government of the United States 
is to seek a solution which may bring about permanent 
safety and peace to China, preserve Chinese territorial 
and administrative entity... .” 27 


The reply to the British Government respecting the 
Anglo-German agreement was given in response to the 
request to concur in the principles of the equal oppor- 
tunity of trade and that 


“Her Britannic Majesty’s Government and the Impe- 
rial German Government will not on their part make use 
of the present complication to obtain for themselves any 
territorial advantages in Chinese dominions and will di- 
rect their policy toward maintaining undimnished the ter- 
ritorial condition of the Chinese Empire.” *6 


In subsequent agreements or declarations when the 
phrase “the integrity of China” was employed, its mean- 
ing as to territorial integrity was never questioned. 

Respecting the second meaning—the sovereignty of 
China—there is a general agreement among the Powers 


POLICY OF UNITED STATES IN CHINA 159 


that the integrity of China means the sovereignty of 
China. In the Harbin case, when Russia attempted to 
set up a municipal government in Chinese territory, the 
United States Government protested, and contended that, 
by the Treaty of Portsmouth, Russia had obligated her- 
self to observe “a scrupulous regard for the sovereignty 
of China,” and that certain of the municipal ordinances 
“would be a clear infringement upon the sovereignty of 
China,” 2° and that 


“this principle, which this Government concedes to be 
the true one, is, in substance, that the only basis for the 
exercise of governmental rights on the part of the offi- 
cials of any country other than China within the Chinese 
Empire should lie in the extraterritorial rights granted by 
the treaties of China to the several Powers.” 


Thus, in this case, the United States Government took 
the attitude that the sovereignty of China must be re- 
spected, and that the exercise of any jurisdictional author- 
ity must be based on extraterritorial grants. In the state- 
ment given to the press with regard to the neutralization 
of the Manchurian railways, the phrase “jurisdictional 
integrity” of China was employed side by side with terri- 
torial integrity: 


“As is well known, the essential principles of the Hay 
policy of the Open Door are the preservation of the 
territorial and jurisdictional integrity of the Chinese Em- 
pire, and equal commercial opportunity in China for all 
nations.” 3° 


In the Franco-Japanese agreement of 1907, the Russo- 
Japanese agreement of 1907, the Root-Takahira agree- 
ment of 1908, and the Lansing-Ishii agreement of 1917, 
the Anglo-Japanese Alliance of 1905 and 1911 *t—in all 
these agreements the expression was used, “the independ- 
ence and integrity of China.” 

As regards the third meaning—the administrative in- 


160 POLICIES OF GREAT POWERS IN CHINA 


tegrity of China—there is no such unanimity of opinion, 
but rather a division of the same. It is claimed that 
the Open Door principles do not apply to, nor include, 
the administrative integrity of China. Reference is made, 
as illustrations, to the Chinese Salt Administration and 
the Maritime Customs Service, which are all under for- 
eign supervision. On the other hand, it is contended 
that the Open Door Doctrine applies to, and includes, 
the administrative integrity of China. For administra- 
tive integrity is a necessary element of territorial entity 
and sovereignty, the want of which will render the juris- 
dictional authority nothing more than a name. In the 
second circular of July 3, 1900, John Hay did mention 
the preservation of the administrative integrity of China 
as one of the objectives of his policy: 


“The policy of the Government of the United States 
is to... preserve Chinese territorial and administrative 
SNe yarn naae 


In 1913, when Wilson withdrew the support of the United 
States Government from the American group in the 
Sextuple Consortium, resulting in the withdrawal of 
the American bankers therefrom, he based his objection 
on the ground that the reorganization loan touched the 
administrative integrity of China.** 


“The conditions of the loan seem to us to touch very 
nearly the administrative independence of China itself 
and this administration does not feel that it ought, even 
by implication, to be a party to these conditions. The 
responsibility on its part which would be implied in re- 
questing the bankers to undertake the loan might con- 
ceivably go the length in some unhappy contingency of 
forcible interference in the financial, and even the politi- 
cal affairs of that great Oriental state, just now awaken- 
ing to a consciousness of its power and of its obligations 
to its people.” 


POLICY OF UNITED STATES IN CHINA 161 


Although this policy of non-participation was reversed 
later in 1916 344 and 1918,348 the reéntrance of American 
finance into China, now in the form of the New Inter- 
national Banking Consortium, did not mean to infringe 
or destroy the administrative integrity of China, but 
rather to uphold and save the same from the consequences 
of extravagance and corruption. This interpretation of 
the Open Door doctrine as including the administrative 
integrity of China does not, however, preclude the possi- 
bility and probability of active intervention in the finances 
of China, in case of bankruptcy or insolvency. In this 
contingency, the supervision or control necessitated by 
the situation would be undertaken, not in the spirit, or 
with the intention, to infringe or nullify the administra- 
tive integrity of China, but rather to uphold and save the 
same with a view to restoring it eventually to the Chinese 
Government. 


Having thus seen the meaning of the Open Door doc- 
trine with respect to the integrity of China, let us inquire 
into another problem which has often been noted, and 
that is, Does the Open Door doctrine apply to railways 
in China? Is the principle of equal opportunity applica- 
ble in their case? In the Anglo-Japanese Alliance of 
1905 and 1911 *% and the Lansing-Ishii agreement of 
1917,°° mention was made only for the “equal opportunity 
for commerce and industry in China.” Railways were 
not mentioned, unless by a liberal construction they were 
included under the category of “commerce and industry.” 
On the other hand, railways are apt to control the eco- 
nomic life of any territory through which they pass, and 
unless the powers obtain equal share in railways, the 
trade of the regions are liable to be dominated by the 
power or powers controlling the railways. Furthermore, 
as trade follows loans, railway loans must be shared by 
all in order to secure the equal opportunity in supplying 
materials and other necessities for railways. 


162 POLICIES OF GREAT POWERS IN CHINA 


In spite of these conflicting opinions, it may be con- 
cluded, however, that the Open Door doctrine does apply 
to railways in China, with the reservation or condition 
that vested interests are to be respected. This conclusion 
conforms with the original doctrine as set forth by John 
Hay and the subsequent development and application of 
the principles. To repeat, the first of the three provi- 
sions as set forth in John Hay’s Circular Note of Sep- 
tember 6, 1899, was that each Government in its respec- 
tive spheres of interest or influence “will in nowise inter- 
fere with any treaty port or any vested interest within 
any so-called ‘sphere of interest’ or leased territory it may 
have in China.” ** Thus vested interests of whatever 
nationality and in whatever spheres of influence are to 
be respected. In applying this principle to railways, it 
cannot mean any other arrangement than that those 
already constructed or under construction in any spheres 
of interest should be accorded due recognition and re- 
spect. Except for this reservation, the Open Door doc- 
trine applies to railways just as it does to commerce and 
industry. In 1902, when Russia attempted to monopolize 
the economic development of Manchuria through the 
agency of a corporation, John Hay vigorously protested 
against the proposed convention, in which he made the 
specific mention of railways as being included within the 
scope of his objection: 


“Any agreement by which China cedes to any corpora- 
tion or company the exclusive right or privilege of open- 
ing mines, establishing railroads . . . can but be viewed 
with gravest concern by the United States.” 38 


In the proposal for the neutralization of the Manchurian 
railways, Knox put the emphasis on their neutralization 
as the most effective means of maintaining the principles 
of the Open Door doctrine. 


“First, perhaps the most effective way to preserve the 
undisturbed employment by China of all political rights 


POLICY OF UNITED STATES IN CHINA 163 


‘in China and to promote the development of those prov- 
inces under a practical application of the policy of the 
Open Door and equal commercial opportunity would be 
to bring the Manchurian highways, the railroads, under 
an economic, scientific and impartial administration by 
some plan vesting in China the ownership of the railroads 
through funds furnished for that purpose by the inter- 
ested powers willing to participate... .” *° 


Although the plan, as is well known, was defeated 
mainly by the opposition of Japan and Russia, it is 
obvious that the Open Door doctrine does apply to rail- 
ways. Besides, notwithstanding the failure of the neu- 
tralization plan, in the formation of the New International 
Banking Consortum, the United States Government pro- 
posed: 


“That not only future options that might be granted 
but concessions already held by individual banking groups 
on which substantial progress had not been made, should, 
as far as feasible, be pooled with the Consortium; that 
working on these two principles, the operations of the 
Consortium would serve to prevent for the future the 
setting up of special spheres of influence on the conti- 
nent of Asia. The United States Government laid great 
stress on this latter point as being highly effective in 
doing away with international jealousies and in helping to 
preserve the integrity and independence of China.” *° 


Thus, the United States Government proposed to re- 
spect the vested interests of the existing railways and 
the railways on which substancial progress had been 
made, but at the same time to pool or internationalize all 
future options and existing concessions in railways on 
which substantial progress had not been made. 

Reasoning from the neutralization plan and the policy 
of the New Consortium with respect to railways, the 
conclusion can be safely reached that the Open Door 
doctrine does apply to railways in China with the sole 


164 POLICIES OF GREAT POWERS IN CHINA 


reservation that vested interests of the existing railways 
will be accorded due respect. And derivable from the 
same facts, a new principle, or corollary to the principles 
of the Open Door doctrine, can also be obtained, and 
that is the internationalization of these railways. Rail- 
ways are usually monopolies. As such they are not 
supposed to be subject to competition as the other forms 
of economic enterprises, where competition is permissible 
and wholesome. When and where they are subject to 
competition, the inevitable outcome is either the destruc- 
tion of both, or all lines, or their agreement and coopera- 
tion, and in some cases, even combination. As the Open 
Door principle of equal opportunity presupposes com- 
petition, it meets the stone wall of this economic princi- 
ple governing railways, that is, they are monopolies and 
not open to competition. Confronted with this difficulty, 
the exponents of the Open Door doctrine can either refuse 
to apply it to railways, excluding them as being outside 
of the field of competition, as evidenced by the demarca- 
tion of the various spheres of influence for the construc- 
tion of railways in China, or they must resort to the 
only and inevitable alternative or solution, under which 
the Open Door policy can be safely and beneficially ap- 
plied, that is, the internationalization of Chinese railways. 
It is for this reason that the neutralization plan was pro- 
posed, and it is for the same reason that the New Con- 
sortium adopted the policy of the internationalization 
or the pooling of all railway options. The thesis may, 
therefore, be proposed that henceforth the internation- 
alization of railways in China, so far as the Open Door 
doctrine is applied to them, will become a new princi- 
ple, or corallory to the leading principles, of the Open 
Door doctrine. 


In addition to the internationalization of railways, 
another question may be raised and that is as to how 
the Open Door doctrine can be held to agree with a 


POLICY OF UNITED STATES IN CHINA 165 


recognition of Japan’s special interest in China as em- 
bodied in the Lansing-Ishii agreement of November 2, 
1917. That agreement provided that 


“The governments of the Untied States and Japan 
recognized that territorial propinquity creates special re- 
lations between countries, and consequently the govern- 
ment of the United States recognizes that Japan has 
special interests in China, particularly in the part to 
which her possessions are contiguous.” ** 


From a superficial examination of the Open Door doc- 
trine and the principle of special interests, the conclu- 
sion cannot be escaped that the recognition of such in- 
terests is contrary, and inconsistent, to the Open Door 
doctrine. For “special interests’? must mean interests 
which are special, or, in other words, exclusive to Japan. 
Yet, the Open Door doctrine proclaims the gospel of 
equal opportunity, barring any exclusive claims. 

‘From a close scrutiny, however, of the agreement and 
Secretary Lansing’s testimony before the Committee on 
Foreign Relations of the United States Senate, the im- 
pression of inconsistency yields to a more sympathetic 
conclusion that the recognition of Japan’s special in- 
terests was not inconsistent, but rather in consonance, 
with the Open Door doctrine. Lansing recognized Jap- 
an’s special interest in China as of the same character as 
the special interests of the United States in Mexico, or 
Canada, or the Latin-American Republics. His own 
testimony in the Senate clearly bears evidence to his in- 
tention and interpretation: 

“...I1 told him then that if it meant ‘paramount 
interest,’ I could not discuss it further; but if he meant 
special interest based upon geographical position, I would 
consider the insertion of it in the note. Then it was, 
during that same interview, that we mentioned ‘paramount 
interest’ and he made a reference to the Monroe Doc- 


166 POLICIES OF GREAT POWERS IN CHINA 


trine, and rather a suggestion that there should be a 
Monroe Doctrine for the Far East. 

“And I told him that there seemed to be a misconcep- 
tion as to the underlying principle of the Monroe Doc- 
trine; that it was not an assertion of primacy or “para- 
mount interest’ by the United States in its relations to 
other American Republics; that its purpose was to pre- 
vent foreign powers from interfering with the separate 
rights of any nation in this hemisphere, and that the 
whole aim was to preserve to each republic the power 
of self-development. . . .” 


Again in his statement of November 6, 1917, in explana- 
tion of the agreement, Mr. Lansing stated: * 


“The statements in the notes require no explanation. 
They not only contain a re-affirmation of the ‘Open Door’ 
policy, but introduce a principle of non-interference with 
the sovereignty and territorial integrity of China, which, 
generally applied, is essential to perpetual international 
peace as clearly declared by President Wilson and which 
is the very foundation of Pan-Americanism as_ inter- 
preted by this government.” 


From his own testimony and statement, the conclu- 
sion may be drawn that in recognizing Japan’s “special 
interests,” Secretary Lansing recognized Japan’s pro- 
fessed Monroe Doctrine in China, or at least its leading 
principle—Japan’s right to enforce, both on herself and 
the other Powers, the obligation of non-interference with 
the sovereignty and territorial integrity of China. Re- 
grettable as the fact that no definition of “special in- 
terests” was given in the agreement may be, the inter- 
pretation of Mr. Lansing stamps the expression “‘special 
interests” with the indelible meaning of non-interfer- 
ence with the sovereignty and territorial integrity of 
China. As such, and as the Open Door doctrine pro- 
poses to preserve the same sovereignty and territorial in- 
tegrity of China, the recognition of the special interests 


POLICY OF UNITED STATES IN CHINA 167 


of Japan was not inconsistent but rather in harmony, 
with the principles of the Open Door doctrine.** 

If, however, the special interests of Japan are inter- 
preted to mean vested interests, then the Open Door doc- 
trine recognizes, and accords them due respect. The 
compromise reached at Tokio between Thomas W. La- 
mont and the Japanese Government respecting the Japan- 
ese special interests in South Manchuria and Eastern 
Inner Mongolia, which were interpreted to mean vested 
interests, goes to show that special interests in vested 
rights are not inconsistent with the Open Door 
doctrine.* 

Having seen its meaning, let us pass on to the condi- 
tions requisite for successful application. It is not a 
part of international law, but a mere international agree- 
ment among the powers interested in China, and under- 
taken on the condition that the other Powers would ob- 
serve the same. It has therefore no other sanction for 
its enforcement than the moral validity of the doctrine, 
or the physical force that each state may choose to put 
behind it. Besides, it is an agreement among the Powers 
imter se to which China is not a party. “She, therefore, 
technically speaking, cannot be said to have gained any 
contractual or conventional rights from or under them.” *° 
It seems, therefore, that except for the fulfillment of cer- 
tain conditions, the application of the doctrine is likely 
to fail. 

The first necessary condition is the codperation of 
China. Unless she obeys the doctrine, it is hopeless to 
expect its successful operation. For China can grant 
special privileges and thus violate the principle of the 
equal opportunity of trade, with the consequence that 
the Powers thus discriminated against will be obliged 
to claim similar or equivalent privileges, in which case, 
the United States will be helpless to check the Powers 
from a scramble. The protest of Hay, against the grant 
to Russia, through a corporation, of the monopoly of the 


168 POLICIES OF GREAT POWERS IN CHINA 


industrial development of Manchuria, was based specifi- 
cally on this ground. 


«|. Furthermore, such concessions on the part of 
China will undoubtedly be followed by demands from 
other powers for similar and equal exclusive advantages 
in other parts of the Chinese Empire and the inevitable 
result must be the complete wreck of the policy of abso- 
lute equality of treatment of all nations in regard to 
trade, navigation, and commerce within the confines of 
the empire.” *® 


Again, China may voluntarily alienate, or barter away, 
or forfeit her territory and sovereignty, in which case, 
the United States will be powerless to assist in any way, 
much as she may wish to do so. As Professor W. W. 
Willoughby has well said: 


“China will, therefore, be ill-advised if she does not 
bear constantly in mind the fate of Korea. That country 
had had its sovereignty guaranteed by several of the 
Powers, and especially and repeatedly by Japan, and 
yet, when Japan exhibited to the world a document pur- 
porting to be a treaty signed by the government of Korea 
consenting to annexation, the other Powers, even those 
which, like the United States, had promised to exert good 
offices in case other powers should threaten it, did not 
feel called upon to go back to the formal instrument of 
annexation in order to determine the circumstances under 
which it had been negotiated and the signatures to it 
obtained.” 47 


Finally, China may let extravagance, corruption, civil 
dissension and militarism so infest and strangle her gov- 
ernment as to render her bankrupt, in which case the 
United States, regretting to intervene, will be compelled, 
in conjunction with the other interested Powers, to take 
over the finances of China and, by so doing, practically 
destroy her administrative integrity. In short, China 


POLICY OF UNITED STATES IN CHINA 169 


must codperate with the United States in the application 
of the Open Door doctrine by a scrupulous observance 
of the principles of the equal treatment of all Powers 
and of the preservation of her own integrity. To act 
otherwise means the inevitable doom of the policy. 

Nor must China hypnotize herself into the belief that 
the United States will fight for her integrity and so fail 
to provide her own means of national defense or to resist 
foreign aggression. In declaring the Open Door doctrine, 
the United States Government simply states its own 
policy or attitude and asks the other Powers interested 
to do likewise. But she does not pledge the enforcement 
thereof by her own military and naval forces. Prob- 
lematical as it may be as to whether the United States 
will ever fight for China, the conclusion may be safely 
ventured that, unless China fulfills the obligation due to 
herself, by defending her own integrity to her utmost 
ability, the United States will not feel called upon to 
undertake a task which should rest on the shoulders of 
the Chinese themselves. The Senate reservation to Article 
10 of the Peace Treaty with Germany signed at Versailles 
on June 28, 1919, clearly shows that except at the dis- 
cretion and direction of Congress, the United States will 
not obligate herself to defend the integrity and independ- 
ence of another state.** Again, when Russia violated 
the Open Door in Manchuria and refused to fulfill her 
pledge of evacuation except upon the grant of seven addi- 
tional demands, Secretary Hay wrote: *° 


“If they choose to disavow Plancon (the Russian 
Charge d’Affaires at Peking) and to discontinue to vio- 
late their agreements, we shall be all right, but if the lie 
they told was intended to serve only a week or two, the 
situation will become a serious one. The Chinese as well 
as the Russians seem to know that the strength of our 
position is entirely moral; and if the Russians are con- 
vinced that we will not fight for Manchuria—as I sup- 
pose we will not—and the Chinese are convinced that 


170 POLICIES OF GREAT POWERS IN CHINA 


they have nothing but good to receive from us and noth- 
ing but a beating from Russia, the open hand will not be 
so convincing to the poor devils of Chinks as the raised 
club. Still we must do the best we can with the means 
at our disposal.” °° 


The second condition necessary for the successful ap- 
plication of the Open Door policy is the direct participa- 
tion of the United States in the international affairs of 
China. This is necessary, because, unless the United 
States participates in the affairs and sees that the Open 
Door doctrine is observed, the other Powers will fall 
back into the practice of insisting on closed spheres, and 
degenerate into the old international struggle for con- 
cessions. This was clearly shown after the withdrawal 
of the American Group from the Sextuple Consortium 
in 1913, when, in absence of a moral leader to uphold the 
Open Door doctrine, the Powers resorted to another 
struggle for concessions in China as narrated in the chap- 
ter on International Cooperation and Control. In addi- 
tion the withdrawal hindered the investment of American 
capital in China and thereby reduced the trade that neces- 
sarily follows the loans. This harmful effect was clearly 
voiced by the complaint of the American Association of 
Gtimea' 8+ 


“The policy of the United States Government in dis- 
couraging investment of American capital in Chinese rail- 
ways and in loans to the Republic has been detrimental 
to our merchants, but as the administration gains a clearer 
view of the situation in China and begins to recognize 
the things that must be done if the United States is to 
share in this vast trade area, there are possibilities of 
some modifications of this policy which is believed to 
have been put forth without sufficient investigation, and, 
at that, on sentimental grounds. This association should 
use every means in its power to awaken the government 
in Washington, through whatever means it can find, to 
the necessity of a more vigorous policy in China to secure 


POLICY OF UNITED STATES IN CHINA 171 


for us and to uphold open when secured as liberal 
advantages for the extension of our trade as are now en- 
joyed by other nationalities.” 


Furthermore, from the point of view of Chinese na- 
tional interests, the withdrawal of the United States left 
China without a disinterested friend to help her in her 
dealings with other Powers. This need of friendly as- 
sistance and mediation is set forth clearly in the case of 
the Hukuang Railway Loan, when the United States in- 
sisted on participation: °? 


“The fact that the loan was to carry an Imperial guar- 
anty and be secured on the Internal revenues made it of 
the greatest importance that the United States should 
participate therein in order that this government might 
be in a position as an interested party to exercise an in- 
fluence equal to that of any of the other three Powers 
in any questions arising through the pledging of China’s 
national resources, and to enable the United States, more- 
over, at the proper time again to support China in urgent 
and desirable fiscal administrative reforms, such as the 
abolition of likin, the revision of the customs tariff, and 
general fiscal and monetary rehabilitation.” 


As American participation is so necessary, and espe- 
cially impelled by the consideration of equipping China 
for active participation in the Great War, the United 
States Government, in 1918, reversed its policy and per- 
mitted American capitalists to make loans to China, 
backed by diplomatic support. The participation how- 
ever was to be qualified by certain conditions: To this 
effect, the Department of State said: * 


“China declared war against Germany very largely 
because of the action of the United States. Therefore 
this government has felt a special interest in the desire of 
China so to equip herself as to be of more specific as- 
sistance in the war against the Central Powers. 


172 POLICIES OF GREAT POWERS IN CHINA 


“Until the present time the engagements of the United 
States in preparing to exert effectively its strength in 
the European theater of war has operated to prevent spe- 
cific constructive steps to help China realize her desires. 
Recently, however, this government felt that, because of 
the approach to Chinese territory of the scenes of dis- 
order, a special effort should be made to place proper 
means at the disposal of China. Consequently a number 
of American bankers, who had been interested in the 
past in making loans to China, and who had had experi- 
ence in the Orient, were called to Washington and asked 
to become interested in the matter. The bankers re- 
sponded very promptly and an agreement has been reached 
between them and the Department of State which has 
the following salient features: 

“First, the formation of a group of American bankers 
to make a loan or loans and to consist of representatives 
from different parts of the country. 

“Second, an assurance on the part of the bankers that 
they will codperate with the government and follow the 
policies outlined by the Department of State. 

“Third, submission of the names of the banks who will 
compose the groups for approval by the Department of 
State. 

“Fourth, submission of the terms and conditions of 
a loan or loans for approval by the Department of 

tate. 

“Fifth, assurances that, if the terms and conditions 
of the loan are accepted by this government and by the 
government to which the loan is made, in order to en- 
courage and facilitate the free intercourse between Amer- 
ican citizens and foreign states, which is mutually ad- 
vantageous, the government will be willing to aid in 
every way possible and to make prompt and vigorous rep- 
resentations and to take every possible step to insure 
the execution of equitable contracts made in good faith 
by its citizens in foreign lands. 

“Tt is hoped that the American group will be associated 
with bankers of Great Britain, Japan and France. Nego- 
tiations are now in progress between the government 
of the United States and those governments which it 


POLICY OF UNITED STATES IN CHINA 173 


is hoped will result in their coGperation and in the par- 
ticipation by the bankers of those countries in equal parts 
in any loan which may be made.” 


The third condition necessary for the successful ap- 
plication of the Open Door doctrine is the cooperation 
or the Powers interested. That this is necessary, is evi- 
denced by the fact that all the Powers, except Italy, 
addressed by Secretary Hay in his first circular note of 
1899, replied favorably, but with the condition that the 
other Powers would make a similar declaration respecting 
the Open Door policy. This condition means that, unless 
all the other Powers observe the Open Door doctrine, 
any Power promising to do so, is not bound by the ob- 
ligation assumed. Thus, when one Power commences 
to seize concessions, the others do not feel obligated to 
restrain themselves, but, on the contrary, are compelled 
to do likewise. For instance, in the general scramble for 
concessions in 1914 after the withdrawal of the United 
States, France did not feel obliged to abide by her reply 
to the former pledging to observe the Open Door doc- 
trine, but felt free to secure from the Chinese Govern- 
ment the assurance, that in Kwangsi, preference would be 
given to French interests in regard to railway and mining 
enterprises. When Russia forced her joint suzerainty 
with China over Outer Mongolia in 1913, Great Britain 
did not feel bound by her own pledge of 1899 and 1900. 
On the contrary, in order to preserve the balance of power 
and for self-defense, she felt constrained in 1914 to make 
a similar attempt on Tibet. In the absence of any means 
of enforcement, therefore, it is clear that any proposal 
or measure made in behalf of the Open Door policy must 
receive the codperation and support of the Powers in- 
terested. Otherwise it has little chance to succeed. The 
neutralization plan of Secretary Knox, formulated evi- 
dently with statesmanlike purpose, was not materialized 
through the opposition of Russia and Japan. On the 


174. POLICIES OF GREAT POWERS IN CHINA 


other hand, the currency and industrial development loan 
was successfully concluded, although the loan has not 
yet been floated, because of the disinterested sharing on 
the part of the United States with the other Powers 
and their voluntary cooperation. 

The successful application of the Open Door policy, 
therefore, depends upon the fulfillment of these three 
essential conditions: the codperation of China, the direct 
participation of the United States, and the codperation 
of the Powers interested. In view of the present state of 
world politics, the lack of any of these conditions will 
render the application of the Open Door doctrine in 
China unsatisfactory, if not entirely unsuccessful. 


In conclusion, reference must be made to the New In- 
ternational Banking Consortium. This is a living and 
physical personification of the Open Door doctrine. It 
embodies the leading principles of the policy. It aims, 
by an international pooling of interests, to maintain the 
equal opportunity of trade. It aims, moreover, to pre- 
serve, as far as feasible, the territorial sovereignty and 
administrative integrity of China. It proposes to inter- 
nationalize the Chinese railways that are to be built, 
which, as we have seen, has become a new principle or 
logical corollary of the leading principles of the Open 
Door doctrine. Regarding the three conditions necessary 
for the successful application of the Open Door policy, 
it already enjoys two—the direct participation of the 
United States and the codperation of the Powers in- 
terested. Its remaining need is the cooperation of China 
herself, which, under favorable conditions, can be ob- 
tained by proper approach and fail dealing. The success, 
therefore, of the new Consortium spells the success of 
the Open Door doctrine, while the failure of the new 
Consortium means the failure of the Open Door policy. 


POLICY OF UNITED STATES IN CHINA 175 


NOTES TO CHAPTER IX 


1. Morse, Internatl. Rel. of the Chinese Emp., Vol. 3, p. 350, 
et seq.; U. S. For. Rel., 1901, App., pp. 86, 121. 

2. W. F. Mannix, Memoirs of Li Hung Chang, p. 280. 

3. U.S. For. Rel., 1908, p. 64, et seq. 

wa). For. Rel., 1912, p. 88 et seq.; MacMurray, 1911/2; 
U. S. For. Rel., 1913, p 1924, 

3 Putnam Weale, The Fight for the Republic in China, p 
345, 

6. John Hay’s Letter to Paul Dana, dated Mar. 16, 1899, W. 
R. Thayer, The Life of John Hay, Vol. 2, p. 241. 

re f = For. Rel., 1899, p. 128 et seq. 

8. S. For. Rel., 1899, p. 132, Mr. Hay to Mr. Choate, Sept. 
6, 1899: 


9. U.S. For. Rel., 1899, pp. 141-142, Count Mouravieff to Mr. 
Tower, dated Dec. 18- 30, 1899. 

10. U. S. For. Rel., 1899, p. 142, John Hay’s Instructions to 
Ambassadors at the Capitals of the Powers Addressed. 

11. U. S. For. Rel., 1899, p. 132. 

12. U.S. For. Rel., 1899, p. 136, Lord Salisbury to Mr. Choate, 
Nov. 30, 1899. 

13. MacMurray, Treaties and Agreements With or Concerning 
China, 1906/2. 

14. MacMurray, 1913/11, and 1915/10. 

15. MacMurray, 1895/5. 

16. U. S. For. Rel., 1899, pp. 131-133, Mr. Hay to Mr. Choate, 
Sept. 6, 1899. 

17, U. S._For. Rel. 1902, p. 26, Memorandum Respecting 
Manchuria, Feb. 1, 1902, inclosed in John Hay’s Letter to Mr. 
McCormick. 

18. U. S. For. Rel., 1902, p. 57, from the Original Russian 
Note sent by Mr. de Plancon to Prince Ch’i ing, inclosed in Mr. 
Conger’s Letter to Mr. Hay, May 4, 1903. 

Peat. sou Por, Rel.,\ 1902; p. 54, Mr. Hay to Mr. Conger, 
Apr. 25, 1903. 

20. MacMurray, 1903/5. 

21. U. S. For. Rel., 1899, p. 132, Mr. Hay to Mr. Choate, 
Sept. 6, 1899. 

22: i: S. For. Rel., 1899, p. 141, Mr. Hay to Mr. Tower, 
Sept. 6, 1899. 

23. U.S. For. Rel., 1901, App., Affairs i in China, p. 12. 

24. U. S. For. Rel., 1901, App. Affairs in China, Di 32. 

eon. S., For. Rel, 1905, p. 1, Circular Telegram Respecting 
the Territorial Integrity of China, Jan. 13, 1905. 

26. U.S. For. Rel., 1910, pp. 243-245, Jan. 6, 1910. 

27. U.S. For. Rel., 1901, App., Affairs in China, Dele. 

28. U. S. For. Rel., 1901, App., ibid, p. 32. 

29. U. S. For. Rel., 1910, pp. 203- 205, the Sec’y of State to 
the Russian Ambassador, Apr. 9, 1908. 


176 POLICIES OF GREAT POWERS IN CHINA 


30. U. S. For. Rel., 1910, pp. 243-245, Statement given to 
Press, Jan. 6, 1910. ete 

31. Millard, Democracy and the Eastern Question, App. A, 
p. 361 et seq. RO RE ; 

32. U. S. For. Rel., 1901, App., Affairs in China, p. 12. 

33. U. S. For. Rel., 1913, p. 170-171, Statement Issued to 
Press by President Wilson, March 18, 1913. 

34A. N. Y. Times, Nov. 17, 1916, p. 17. 

34B. N. Y. Times, July 30, 1918, p. 13. 

35. Millard, Our Eastern Question, App. L, pp. 452-456. 

36. Hearings before the Comm. on For. Rel., U. S. Sen., 66th 
Cong., First Ses., on Treaty of Peace with Germany, pp. 225-226. 

37. U.S. For. Rel., 1899, pp. 129, 132, etc. 

38. U.S. For. Rel., 1902, p. 26. 

39. U. S. For. Rel., 1910, pp. 234-235, the Sec’y of State to 
Ambassador Reid, Nov. 6, 1909. 

40. Thos. W. Lamont, Preliminary Report on the New Con- 
sortium for China, pp. 5-6. 

41. Hearings before the Committee on For. Rel., op. cit., Sen. 
Document No. 106, p. 225. 

42. Hearings before the Comm. on For. Rel., ibid, p. 224. 

43. Hearings, ibid., p. 226. 

44. Vide infra, Part 3, The Policy of Japan in China, chaps. on 
the Policy of Paramount Influence, and the Policy of an Asiatic 
Monroe Doctrine. 

oh W. W. Willoughby, Foreign Rights and Interests in China, 
p. 263. 

46. U.S. For. Rel., 1902, p. 26. 

47. W. W. Willoughby, op. cit., pp. 263-264. 

48. Art. 10 reads: “The members of the League undertake 
to respect and preserve as against external aggression the ter- 
ritorial integrity and existing political independence of all mem- 
bers of the League. In case of any such aggression or in case 
of any threat or danger of such aggression, the Council shall 
advise upon the means by which this obligation shall be filed.” 
The reservation reads: “The United States assumes no obliga- 
tion to preserve the territorial integrity or political independence 
of any other country, or to interfere with controversies between 
nations, whether members of the League or not, under the pro- 
vision of Art. 10, or to employ the military and naval forces of 
the United States under any article of the Treaty for any pur- 
pose, unless in any particular case the Congress, which under 
the Constitution has the sole power to declare war or to author- 
ize the employment of the military or naval forces of the United 
States shall by act or joint resolution so provide.” 

9. W. R. Thayer, The Life of John Hay, Vol. 2, p. 369. 

50. Mention must, however, be made of President W. H. Taft, 
who, on account of his personal knowledge of the affairs of the 
Far East, advocated the enforcement of the Open Door policy 
in China with force, if necessary. In his inaugural address of 
Mar. 4, 1909, he said: “In the international controversies that 


POLICY OF UNITED STATES IN CHINA 177 


are likely to arise in the Orient growing out of the question of 
the Open Door and other issues, the United States can maintain 
her interest intact and can secure respect for her just demands. 
She will not be able to do so, however, if it is understood that 
she never intends to back up her assertion of right and her 
defense of interest by anything but mere verbal protest and 
diplomatic notes. For these reasons the expenses of the army 
and navy and of coast defenses should always be considered as 
something which our Government must pay for, and they should 
not be cut off through mere consideration of economy.”—Con- 
gressional Record, Vol. 44, Part 1, 61st Cong., p. 3. 

51. Millard, Our Eastern Question, p. 357, The Annual Report 
of the American Association of China, on Dec. 29, 1914. 

52. U.S. For. Rel., 1910, pp. 243-245, Statement given to Press 
by the Department of State, Jan. 6, 1910. 

53. N. Y. Times, July 30, 1918. 

54. When, therefore, the violation of the Open Door doctrine 
was committed by Japan in 1915, by the presentation of the 21 
Demands, the United States Government, because of the Great 
War, did not seriously take issue with the Japanese Government, 
but was reported to have proposed to settle the matter at the 
close of the Great War by a general international conference, 
thereby to obtain the codperation of the Powers expressly or 
passively committed to the Open Door doctrine, which was 
indispensable for its successful application. ‘No protest or ag- 
gressive action against the Japanese acts or policy in China will 
be made by the United States at this time. The State Depart- 
ment is unwilling to begin a serious controversy in the Far 
East while Europe is seething with war and while this country 
is involved in the numerous difficulties growng out of that 
struggle. For this reason there will be no diplomatic protest 
against Japanese aggressions in China until the European War 
has ended and its international complications have been resolved. 

“The United States will content itself with securing from the 
Mikado’s Government a full and clear statement of the intention 
of the Japanese toward China, particularly toward the Open 
nee policy, and of the effect of the recent demands made on 

ina. 

“With this statement on the diplomatic record, the State De- 
partment will wait until the end of the war. Then it is planned 
to take up the question of Japanese aggressions in China with all 
of the World Powers who are actually or tacitly committed to 
the Open Door policy. State Department officials believe that in 
this way an effective means of meeting the Chinese situation can 
be evolved without complicating the issue.”—Washington Post, 
Sept. 17, 1916; Patrick Gallagher, America’s Aims and Asia’s 
Aspirations, pp. 199-200. 

55. It is within reason to expect that, in the Disarmament and 
tte oo Conference, the Open Door Doctrine will be re- 
affirmed. 


at aoe & 
elt 4 


X. 


XI. 
XII. 
XIII. 
XIV. 
ate 
XVI. 


XVII. 


PART III 
Tre POLICY OF JAPANJIN CHINA 
THE DEVELOPMENT OF JAPAN’S POLICY IN 
CHINA. 
Poticy oF Economic EXPLOITATION. 
Poricy oF TERRITORIAL EXPANSION. 
PoLicy oF PARAMOUNT INFLUENCE. 
Poticy oF PoLiITIcAL CONTROL. 
Tue “Astatic Monroe Doctrine.” 


THe “TWENTY-ONE DEMANDS” AS AN ILLUSTRA- 
TION OF JAPAN’S PoLiciES IN CHINA. 


Tue WIispoM oF JAPAN’S PoLicy IN CHINA. 


x 


THE DEVELOPMENT OF JAPAN’S POLICY IN 
CHINA 


Tue development of Japan’s policy in China turned 
on three successive wars—the Chino-Japanese War 
(1894-1895), The Russo-Japanese War (1904-1905) and 
the World War (1914-1918). At each of these succes- 
sive milestones, it has taken a new turn and a new de- 
velopment. 

The first stage of Japan’s policy was reached in the 
Chino-Japanese War. It was characterized by the in- 
tense national desire to recover judicial and tariff au- 
tonomy, and to achieve the status of national equality. 
Thus the policy of this period, both internal and external, 
was directed primarily to the upbuilding of a new Japan 
which could stand on the footing of equality with the 
Western Powers. In 1897, when the goal of national 
equality had been reached, Count Okuma said in the 
House of Representatives: “The national policy, the so- 
called opening and development of the country, or in 
other words, this principle of attaining an equal foot- 
ing with the Powers was, I firmly believe, the motive 
that has enabled Japan to become a nation advanced in 
civilization and respected by the world.” ? 

During this period, while the primary concern of Japan 
was her own development, she was none the less con- 
cerned with the independence of Korea, and this because 
the independence of Korea is indispensable to her safety. 
Korea is so located geographically in relation to Japan 
that any attempt to invade the latter from the mainland 
must first conquer Korea and make that nation a step- 
ping-stone to Japan’s subjugation. So, to allow any for- 

181 


182: ° ‘THE POLICY OF PARANA MOTT INS 


eign Power to hold Korea therefore was, as the Japanese 
statesmen put it, to allow that Power to hold a dagger 
at the heart of Japan. For measures of self-defense, 
therefore she must maintain the independence of Korea. 


Holding such a policy, Japan’s first object of attack was 
naturally China, who claimed suzerainty over Korea. To 
free Korea from the control of China was therefore one 
of the cardinal principles of her foreign policy. As we 
have seen,” as early as 1876, she had concluded a treaty 
with Korea * recognizing the independence of that state, 
thus ignoring the suzerainty of China. Again, in 1884, 
to settle the collision between the Chinese and the Japan- 
ese troops in Korea, a convention was arranged that, in 
case of despatching troops to Korea, previous notice in 
writing had to be given each to the other,* thus success- 
fully limiting the suzerain rights of China, and mean- 
while asserting Japan’s joint influence over Korea. Fi- 
nally, in 1894, when, on account of the Tonghak Rebellion, 
the forces of the two states were brought face to face in 
Korea, and although the rebellion had already been sup- 
pressed by the Korean soldiers, and China had already 
suggested a simultaneous withdrawal, Japan nevertheless 
refused to retire. On the contrary she insisted on coop- 
erating for the reformation of the internal administration 
of Korea, to which China refused to accede. Conflict 
could have been avoided, had Japan so desired, but she 
had already determined on her policy which was to ex- 
tinguish the suzerain claims of China, achieve the in- 
dependence of Korea, attain a footing of national equality 
with a defeated China. Thus resolved, and the incident of 
Kowshing having offered the pretext, she forced the 
war. 

Having demonstrated her national prowess, she made 
good use of her victories to consolidate her own position 
of national equality. By the treaty of Shimonoseki, apart 
from the recognition of Korean independence, the cession 


JAPAN’S POLICY IN CHINA 183 


of the Pescadores, Formosa and Liaotung, and the in- 
demnity of 200,000,000 Kuping taels, she obtained the 
abrogation of all previous treaties and the conclusion of 
new ones to be based on “‘the treaties, conventions and 
regulations now subsisting between China and European 
powers,’® thereby placing herself on a par with the 
Western Powers in relation to China. Subsequently, in 
pursuance of the provision, she concluded the Treaty of 
Commerce, signed at Peking, July 21, 1896, by which she 
secured extraterritorial jurisdiction’ and the most fav- 
ored nation treatment.2 Meanwhile, vis-a-vis the West- 
ern Powers, she concluded one treaty after the other, re- 
covering her judicial and tariff autonomy, until June 30, 
1899, when “the operation of all the old treaties came 
simultaneously to an end‘and for the first time in his- 
tory, large, rich and intelligent European communities 
became subject to the unfettered jurisdiction of an 
Oriental Non-Christian Power.” ® 


Although the goal of national equality had been 
reached, a new menace, more threatening than Chinese 
influence in Korea, arose upon the horizon of the Japan- 
ese mind, and dominated the second stage of the develop- 
ment of Japan’s policy. This new menace was the Rus- 
sian advance in Manchuria. In concert with France and 
Germany, Russia interposed the tripartite intervention 
against Japan’s possession of Liaotung, which compelled 
her to disgorge the territory for an additional indemnity 
of 30,000,000 Kuping taels.1° This act of intervention, 
initiated by Russia,4‘ so incensed Japan that thence- 
forth, she made the grim resolve to face the new 
menace. 


“It became to her as clear as daylight that the new 
position she had acquired in the Orient by her victory 
over China could be maintained, and even her independ- 
ence must be guarded, only by an armament powerful 


184 THE POLICY OF JAPAN IN CHINA 


enough to give her a voice among the first class Powers 
of the world. If she could not retire into herself, and 
finally cease to exist, she must compete with the greatest 
nations, not only in the arts of peace, but also in those 
of war. Moreover, a far vaster conflict than she had 
ever known in her history, excepting the Mongol invasion 
of the thirteenth century, was seen to be awaiting her 
.... The only course to save her seemed to be, now 
as at any other recent crisis of her life, to go forward 
and become equal to the new expanding situation.” 

Actuated by this high resolve, she bent all her energy 
on the day when she would come to grapple with the 
new menace. 

Working day and night in preparation for the coming 
crisis, Japan abandoned her old hostility toward China 
and espoused the Open Door policy. Responding readily 
to Secretary Hay’s circular note of 1899, she gave her 
“assent to so just and fair a proposal of the United 
States, provided that all the other Powers concerned 
shall accept the same.” ?* During the Boxer Uprising, her 
soldiers exemplified both courage and orderly conduct, 
and in the negotiation for settlement, she sided, mainly, 
with Great Britain and the’ United States.* As against 
the Russian Convention in regard to Manchuria, and 
the Seven Articles, joining Great Britain and the United 
States, she entered repeated protests.1° During the nego- 
tiations attending the conclusion or the Anglo-Japanese 
Alliance Count Hayashi, in response to Lord Lansdowne’s 
inquiry as to Japan’s policy in China, replied: “As I 
have before stated, we entirely agreed with the British 
policy in Eastern countries. That is to say, we wish to 
maintain the territorial integrity of China and the princi- 
ple of equal opportunity.” 7° And when the Alliance was 
concluded, the preamble read: 


“The governments of Great Britain and Japan, actuated 
solely by a desire to maintain the status quo and general 


JAPAN’S POLICY IN CHINA 185 


peace in the extreme East, being moreover specially in- 
terested in maintaining the independence and territorial 
integrity of the Empire of China and the Empire of 
Korea, and in securing equal opportunities in these coun- 
tries for the commerce and industry of all nations, hereby 
marred, €tc2' 


Finally, in the negotiation with Russia just prior to 
the declaration of war, Japan repeatedly insisted on the 
integrity of China in Manchuria, the observance of which 
Russia repeatedly refused to pledge. Thus, during the 
period, when she was feverishly preparing for her clash 
with Russia, Japan was a consistent upholder of the Open 
Door doctrine in China. 


After the victories she achieved in the Russo-Japanese 
War, the policy of Japan took a radical turn in China. 
Instead of setting her face against Russia, she set it in 
the direction of the mainland of Asia. In other words, 
she launched her policy of continental expansion. When 
Komura left for Portsmouth, he had already formulated 
the plan of a Greater Japan. 


“On the Asian continent he would create a Greater 
Japan. . . . Manchuria and the road to Europe must be 
won. In the Portsmouth deliberations, August 10 to 
September 5, 1905, Russia agreed to share with Japan all 
her special rights in the Chinese Empire and, accordingly 
turned over to her the texts of all her previous treaties 
with China . . . what was wanted was that which could 
guarantee Japan’s future—a foothold on the Continent, 
control of high seas to Europe, preponderance in the de- 
velopment of Manchuria, the subordination of China, and 
the friendship of Russia . . . all their ends for which the 
war had been fought—had been settled in Komura’s 
mind before leaving Japan and were won at Ports- 
mouth,” 28 


_Upon his transfer from London to the Japanese For- 
eign Office, Hayashi, like Komura, laid down the policy, 


186 THE POLICY OF JAPAN IN CHINA 


that was to be carried out by all diplomatic agents of 
Japan. This policy was a peaceful penetration of China 
by means of commercial and economic expansion, backed 
by diplomatic pressure and armed force, with a view to 
eventual political control. Industrial expansion was to 
be assisted by political expansion, and vice versa. With- 
out commercial expansion, political control would be hol- 
low ; without political control commercial expansion would 
be unsafe and unstable.?® 

To execute this policy of continental expansion, Japan 
had to make certain strategic moves. The first was the 
subjection and annexation of Korea. Just as any power 
attempting to invade Japan from the direction of the 
mainland must first conquer Korea, so likewise Japan 
must first subjugate and control Korea and make that 
state a first step toward the domination of Eastern Asia. 
After her declaration of war on Russia, she established 
her protectorate over Korea,?° appointed advisers to con- 
trol finance and foreign relations,?4 and took over the 
communication systems—post, telephone, telegraph— 
amalgamating them with her own.?? Immediately upon 
the conclusion of the war, she took over the foreign re- 
lations of Korea, as the first step towards final annexa- 
tion.”* In the Anglo-Japanese Alliance, dated August 
12, 1905, she obtained the recognition of her paramountcy 
over Korea and of her right “to take such measure of 
guidance, control and protection in Korea as she may 
deem proper and necessary” ** (Art. 3). In his letter 
to Sir C. Hardinge, the British Ambassador to Russia,?® 
Lord Lansdowne said: “It has, however, become evi- 
dent that Korea, owing to its close proximity to the 
Japanese Empire and its inability to stand alone, must 
fall under the control and tutelage of Japan.” In 1907 
the administration of Korea was placed under the con- 
trol of the Japanese Resident-General.2* In 1910, the 
annexation of Korea was consummated.?’ Thus, Japan 
completed her first step in continental expansion. 


JAPAN’S POLICY IN CHINA 187 


Having made Korea a stepping-stone, she was ready 
to pursue her policy in China. She wanted to exploit 
the latter’s natural resources. She desired to dominate, 
if not actually to annex, South Manchuria and Eastern 
Inner Mongolia; she was anxious to displace foreign in- 
fluence in China by her own paramount influence; she 
yearned to establish an Asiatic Monroe Doctrine, and, 
above all, designed to obtain the control of the Peking 
Government. All these things she aimed to do, but she 
found there was one great obstacle in her way, and that 
was the presence in China of the European Powers. Be- 
cause of the balance of power, she was not able to move 
in the direction she wished, without arousing the jealousy 
and opposition of the other Powers. She had to wait 
for the opportunity. 

But the Great War came in 1914, and the chief atten- 
tion of the rival Powers was ‘transferred to the battle- 
fields of Europe. By Japan, this was regarded as an 
opportunity sent by Providence. A Black Dragon Society 
appeared and urged the government to solve the Chinese 
question at the opportune moment,?* by the formation of 
a defensive alliance with China, based on a set of terms, 
which well reflected those of the subsequent Twenty- 
one Demands: 


“Now is the most opportune moment for Japan to 
quickly solve the Chinese question. Such an opportunity 
will not occur for hundreds of years to come. Not only is 
it Japan’s divine duty to act now, but present conditions 
in China favor the execution of such a plan. We should 
by all means decide and act at once. If our authorities 
do not avail themselves of this rare opportunity, great 
difficulties will surely be encountered, in future in the 
settlement of this Chinese question. Japan will be iso- 
lated from the European Powers after the war, and will 
be regarded by them with envy and jealousy just as Ger- 
many is now regarded. Is it not then a vital necessity 
for Japan to solve at this very moment the Chinese ques- 
tion?” 29 : 


188 THE POLICY OF JAPAN IN CHINA 


Japan struck while the iron was hot. She ousted Ger- 
many from Shantung and made herself that nation’s suc- 
cessor, thus extending her influence over the Yellow River 
Basin. She then lowered the mask she had been wearing 
because of the presence of the other Powers in the Orient, 
and revealed her real intentions regarding China. She 
presented the Twenty-one Demands which form the best 
single document exposing Japan’s policy in China (this 
subject will be discussed in a subsequent chapter).*°° Hav- 
ing failed to force Group Five on the Chinese Govern- 
ment, she changed her tactics and resorted to indirect 
attack, through indiscriminate loans and the manipulation 
of the Pro-Japanese Anfu Club then in control of the 
Peking Government. This, however, also failed, because 
of the termination of the World War and the consequent 
return of the Powers, and especially because of the vic- 
torious arms of General Wu Pai-fu who destroyed the 
power of the Anfu Club and saved the Peking Govern- 
ment from its deadly grip. When, therefore, Hara came 
to office in 1918, he was compelled once more to put on 
the mask which Okuma had discarded, and resumed the 
policy toward the Powers of international codperation. 


During this period, Japan supplemented her policy of 
advance in China by various agreements with the Powers 
so as to avoid unnecessary conflicts. This was one of the 
policies laid down by Hayashi—the policy of simultaneous 
political and economic expansion, facilitated by interna- 
tional agreements.*t Discarding her old hostility, there- 
fore, and adopting a policy of friendliness toward Russia, 
she concluded the agreement of 1907, pledging to main- 
tain their respective status quo®* As a result of this 
understanding, she failed to protest against the Russian 
establishment of the municipal administration in Har- 
bin in 1907, which right she had denied Russia before 
the Russo-Japanese War. Reacting against the intrusion 
of the Knox neutralization plan, she entered the second 


JAPAN’S POLICY IN CHINA 189 


agreement with Russia, on July 4, 1910, engaging to take 
common measure against outside interference with their 
interests within their respective spheres of influence.** 
During the War, she entered into a secret treaty of alli- 
ance with Russia in 1916, mutually promising armed as- 
sistance in case of war.** Likewise in 1907, she arranged 
an agreement with France,*® Russia’s ally in the Dual Al- 
liance, for mutual support in their respective spheres in 
Asia, thereby incidentally facilitating the flotation of her 
loans in Paris and promoting her own trade in Annam. 

Meanwhile, her relations with the United States be- 
came more and more unsatisfactory and, at times, even 
strained. In launching her policy in China, she realized 
that the power that would most likely stand in her way 
of achievement was the United States, who with her 
espousal of the Open Door doctrine, stood as a guardian 
over China. She took offense at the terms of the Ports- 
mouth Treaty, and, more so, at the Anti-Alien Land Law 
and the California School Incident. In concert with 
Russia, she rejected the neutralization plan of Secretary 
Knox. During the World War, resenting Wilson’s 
friendly note of 1917 to China which it was claimed, 
ignored the special position of Japan in China, she des- 
patched the Ishii Mission and obtained recognition from 
the United States Government of her special interests in 
China. 

Likewise, her relation with Great Britain became less 
cordial. The Anglo-Japanese Alliance of 1911 exempted 
the United States from the force of the Alliance—the 
very nation against whom she would have the Treaty 
direct its application ** (Article 4). Article five of Group 
Five of the Twenty-one Demands asked for rail- 
Way concessions in the Yangtze Valley which con- 
flicted with British interests (Article 5, Group 5).°* The 
general aggressive nature of the Twenty-one Demands, 
especially Group Five, brought forth a storm of protest 
in the British press.*® As a reaction, especially after the 


190 THE POLICY OF JAPAN IN CHINA 


failure of Group Five, the Japanese press conducted an 
anti-British campaign *® and the Japanese entered mean- 
while, in 1916, into a secret alliance with Russia. Above 
all, the Japanese ambition of winning trade predominance 
in China conflicted irreconciliably with the British policy 
of maintaining commercial supremacy. 


Summing up the development of Japan’s policy in 
China, it may be said that, during the first stage culmi- 
nating in the Chino-Japanese War, this policy was di- 
rected primarily to the achievement of national equality 
and the independence of Korea; that during the second 
period, ending with the Russo-Japanese War, it was cen- 
tered on the coming struggle with Russia and the main- 
tenance of the Open Door Doctrine in China; but that, 
with her victory over Russia, came a sharp change in her 
policy, and she launched upon a career of continental ex- 
pansion, treading down a martyred Korea and menacing 
the integrity of China. 


NOTES TO CHAPTER X 


Alfred Stead, Japan by the Japanese, p. 219. 
Vide supra, chapter on the Loss of Dependencies. 
State Papers, Vol. 67, pp. 530-533. 
State Papers, Vol. 76, pp. 297-298. 
Vide supra, chapter on the Loss of Dependencies. 
Hertslet, Vol. 1, p. 364, Art. 6. 
Hertslet, Vol. 1, p. 379 et seq., Arts. 20, 21, 22. 
Hertslet, Vol. 1, p. 381, Art. 25. 
J. H. Longford, The Evolution of Japan, p. 81. 

10. Vide supra, chapter on the International Struggle for 
Concessions. 

11. Count Witte, My Dealings with the Li Hung Chang, 
World’s Work, Jan., 1921, p. 300 et seq. 

12. K. Asakawa, The Russo-Japanese Conflict, p. 79-80. 

13. U. S. Foreign Relations, 1899, p. 139, Viscount Aoki to 
Mr. Buck, Dec. 26, 1899. 

14. Morse, The International Relation of the Chinese Empire, 
Vol. 3, Chapters 10, 11, 12. 

15. Vide supra, chapter on the International Struggle for 
Concessions. 


oo Ot Ss Oe ee 


JAPAN’S POLICY IN CHINA 191 


16. A. M. Pooley, The Secret Memoirs of Tadasu Hayashi, 
p. 134. 

17. State Papers, Vol. 95, pp. 83-84. 

18. Dr. W. E. Griffith’s statement in New York Sun, May 30, 
1915, quoted in Bashford, China an Interpretation, p. 387 et seq. 

19. Pooley, Japan’s Foreign Policy, p. 47 et seq. 

20. State Papers, Vol. 98, p. 842, Protocol of Seoul, February 
23, 1904. 

21. State Papers, Vol. 98, p. 843, Agreement of Aug. 22, 1904. 
ae State Papers, Vol. 98, pp. 1137-1139, Agreement of April 1, 
1905. 

23. State Papers, Vol. 98, pp. 1139-1140. 

24. State Papers, Vol. 98, pp. 136-138. 

25. Millard, Our Eastern Question, Appendix L, p. 452, the 
Marquess of Lansdowne to Sir C. Hardinge, Sept. 6, 1905. 

26. State Papers, Vol. 101, p. 280, Agreement of July 24, 1907. 

27. State Papers, Vol. 103, p. 992, Treaty of Annexation, Aug. 
22, 1910. 

28. Putnam Weale, The Fight for the Republic in China, p. 
125 et seq. 

29. Weale, ibid., p. 128, Memorandum of the Black Dragon 
Society. 

30. See chapter on The Twenty-one Demands as an Illustra- 
tion of Japan’s Policy in China. 

31. Pooley, Japan’s Foreign Policy, p. 47. 

32. MacMurray, 1907/11. 

33. MacMurray, 1910/1. 

34. MacMurray, 1916/9. 

35. MacMurray, 1907/7; Millard, Our Eastern Question, App. 
M, pp. 457-458. 

36. State Papers, Vol. 104, p. 174; Millard, Our Eastern Ques- 
tion, p. 456. 

37. The Sino-Japanese Negotiations, Chinese Official State- 
ment, 1915, p. 22. 

38. Millard, Our Eastern Question, p. 239 et seq. 

39. Ibid., p. 247 et seq. 


XI 
THE POLICY OF ECONOMIC EXPLOITATION 


THE present policy of Japan toward China has five 
clearly defined objectives in view. They are: Economic 
Exploitation, Territorial Expansion, Paramount Influ- 
ence, Political Control and the adoption of an Asiatic 
Monroe Doctrine. 

Moreover, this policy turns on two fundamental prob- 
lems: The first is that of Japan herself, arising out of 
her growing population and the limitations of territory 
and natural resources of the islands. This results in 
the adoption of the policy of territorial expansion, and 
the policy of economic exploitation. The other problem 
is that of China arising out of the international struggle 
for concessions and the latter’s apparent inability to 
resist Western aggression. This predominance of West- 
ern influence endangers the safety of Japan. The second 
problem leads to the adoption of a policy of paramount 
influence, political control and an Asiatic Monroe Doc- 
trine. 

As already stated, the policy of economic exploitation is 
one of two alternative ways of meeting the population 
problem. As population increases, territory must be ex- 
panded, and the art of living raised; otherwise the stand- 
ard of living will be lowered. Excluding consideration 
of allowing the standard of living to deteriorate, increas- 
ing population must be met either by territorial expan- 
sion and economic exploitation abroad, or industrial de- 
velopment at home, or by both. Japan chooses to solve 
the problem by both means. 

The population in Japan proper is 57,070,9361 (on 
December 31, 1918), and the land area of Japan proper 

192 


POLICY OF ECONOMIC EXPLOITATION 193 


amounts only to 148,756 square miles. Dividing the 
land area by the population, the density of population per 
square mile is 384. In comparison with this density in 
other nations, Japan ranks next only to Belgium with 
659.4 and Holland with 474.3, and rivals Great Britain 
with 370.8. Adding to this density, the annual net in- 
crease is about 700,000, or 12.75 per thousand.* At this 
rate, the present population will be doubled in about 
half a century. 

Closely associated with the problem of increasing popu- 
lation, and in fact constituting an integral part of the 
same problem, is the question of food supply. It has 
been estimated that in Japan the per capita consumption 
of rice in a year is one Koku (5.11902 bushels U. S. A.).5 
Calculating on this basis, and Japan’s population num- 
bering 57,070,936, the consumption in 1918 was therefore 
reckoned at approximately 57,070,936 Koku. “Against 
this, the total yield of rice in a normal year is 52,000,000,” 
or 5,070,936 less than the need.* Balancing yearly the 
export of from 600,000 to 700,000 Koku for the 400,000 
Japanese residing abroad with the import of 1,500,000 
Koku from, Korea and Formosa and a little over 1,000,- 
000 from Saigon, the supply is still short by about three 
or four million Koku, which means that three or four 
million mouths would be left unfed, unless the requisite 
supply of rice could be procured elsewhere.’ 

Confronted with the intense pressure of population 
against food supply, Japan is driven to become an indus- 
trial and commercial nation. Just as Great Britain, Bel- 
gium and Holland—all with growing populations and 
comparatively small areas—met their population prob- 
lems through the development of industry and commerce, 
so likewise Japan bends all her energy toward a similar 
course of development. 

In her attempt to do so, however, she finds herself 
deficient in coking coal, iron and steel—the essentials of 
modern industry. She was able to produce in 1918, 28,- 


194 THE POLICY OF JAPAN IN CHINA 


029,000 m. tons of coal,® but she was not able to secure 
sufficient coking coal, indispensable to the steel industry.® 
In accordance with the estimates of the Japanese Eco- 
nomic Investigation Commission, created during the 
Okuma Ministry, the demand for pig iron, while not ex- 
ceeding the supply in 1918, will be 743,000 tons for 1928, 
and the production of the same in Japan proper, in 1921 
and thereafter, will be only 611,500 tons, thus giving rise 
to a shortage which must be filled by the production in 
Korea, Manchuria and China; ?° and the demand for steel 
in 1918 was 1,113,000 tons, and the output in Japan 
proper only 765,000 tons, and in 1928 the demand will be 
2,112,000 and the yield in 1921 and thereafter only 1,- 
090,000 tons, thus giving rise to a shortage of steel in 
1918 at 348,000 tons and in 1928 at approximately 1,022,- 
000 tons. 

Before the World War, Japan relied upon Belgium and 
Great Britain for her supply of steel. After the outbreak 
of the war, she turned to the United States. But when, 
in July, 1917, the United States put an embargo on steel, 
Japan’s supply was cut off, and her ship-building indus- 
tries and iron-works almost came to a complete halt. 
“Never before did Japan realize so keenly as on that 
occasion the precarious nature of her industrial struc- 
ture, depending upon foreign countries for the supply of 
Steel ur 


Thus handicapped by nature, and yet at the same time 
driven by circumstances to become an industrial and com- 
mercial nation, Japan devoted attention to finding a field 
where she might obtain the necessary elements for the 
stability of her economic structure. Surveying the regions 
of the world, she finds China, her next-door neighbor, 
the logical and natural field for commercial expansion. 
There the teeming millions offer a market for Japanese 
manufactured products. There unbounded natural re- 
sources, especially coal, iron and steel, furnish the neces- 


POLICY OF ECONOMIC EXPLOITATION 195 


sary sinews for Japanese industries. There the compara- 
tive shortness of distance, the affinity of language and 
race, and the potential increase of Chinese prosperity— 
all indicate that nature has provided a special field of 
economic activity for the Japanese. Conceiving this to 
be her destiny, she sets her face like a flint toward China 
with the policy of economic exploitation. 


The first region in China to be exploited is South 
Manchuria. By virtue of the Treaty of Portsmouth, 
she obtained from Russia transfer of the lease of Port 
Arthur and Talien-Wan and the cession of the Chinese 
Eastern Railway from Changchun to Port Arthur, with 
the adjoining mines. Possessed of these railway and 
mining interests, the Japanese Government organized the 
South Manchuria Railway Company. The capital is 200,- 
000,000 Yen, one-half held by the Japanese Government, 
represented by the Manchurian railway and accessories 
and the coal mines at Fushan and Yentai, the other half 
offered to private investors, the Japanese Government 
guaranteeing a profit of six percent on the paid-up capi- 
tal for fifteen years.1* Actually, however, the govern- 
ment owns four-fifths of the paid-up capital and appoints 
the president, vice-president and directors.®> It can there- 
fore be said that the South Manchuria Railway Company 
is merely a name, and that the Japanese Government is 
the real factor exploiting the resources of South Man- 
churia. 

The company runs its main line from Dairen to Chang- 
chun, the Port Arthur Branch Line, the Yingkow, Fushan 
and Yentai Branches, and the Mukden-Antung Line, mak- 
ing 692.7 miles in all.1° Besides the railways, it also main- 
tains a regular shipping service between Shanghai and 
Dairen, and also a South China coastwise service. It 
has rebuilt the second quay, and constructed breakwaters, 
and a third quay, in the harbor of Dairen, all of which 
have been completed. Further, it operates electric power 


196 THE POLICY OF JAPAN IN CHINA 


stations at Dairen, Mukden, Changchun, Antung, Fushan 
and Yentai, and electric tramways and gas industries at 
Dairen and Fushan.?” In addition, the company manages 
its own hotels—all bearing the name of the “Yamato 
Hotel’—at Dairen, Hoshigaura (suburbs of Dairen), 
Port Arthur, Mukden and Changchun. Besides these in 
the railway zone, it maintains, according to the report at 
the end of March, 1918,7® eleven hospitals, twenty pri- 
mary schools, eleven Chinese common schools, thirty-two 
business schools, ten girls’ practical schools, one medical 
school (at Mukden), a technical school, and a teachers’ 
training institute at Dairen, one polytechnic laboratory, 
two agricultural experimental stations, thirteen farms and 
seventeen water works.*® 

Furthermore, the company is engaged in the operation 
of the mines, which form one of its most important under- 
takings. The Fushan Colliery, situated about twenty- 
two miles east of Mukden, contains a deposit of an 
average of 130 feet in thickness, “runs for about twelve 
miles parallel to the River Hun,” and yields a total out- 
put of 6,000 tons a day, (or 2,275,905 tons in 1918). 
“The quality, too, is excellent, being of strong caloric 
power and containing very little sulphur.” °° The Yen- 
tai Coal Field, northeast of Liao-yang, yields an output 
of 247 tons daily or (113,679 tons in 1918).74 “The 
coal is soft and pulverizable and emits but little smoke.” ”? 
Among the new undertakings, the iron foundry at An- 
shantien yields an initial output of 150,000 tons which 
will be ultimately increased to 1,000,000, ‘“‘the ore at An- 
shantien being almost inexhaustible.” ?* The glass works, 
the porcelain and the fire-proof tile factory have begun 
to send forth their new products.?4*7® i 

Besides the activities of the South Manchuria Rail- 
way Company, the Japanese Government has other rail- 
way interests in South Manchuria and even in Eastern 
Inner Mongolia. In accordance with the treaty of April, 
1917, she completed the construction of the Kirin-Chang- 


POLICY OF ECONOMIC EXPLOITATION _ 197 


chun Railway on October 16, 1912.2 The South Man- 
churia Railway furnished half of the capital, repayable 
by the Chinese Government twenty-five years from the 
date of the opening.?7. In the Treaty of May 25, 1915, 
the revision of the Kirin-Changchun Railway loan agree- 
ment was stipulated, “taking as a standard the provisions 
in railway loan agreements made heretofore between 
China and foreign financiers,” (Article 7), and also en- 
gaging the Chinese Government to extend to this rail- 
way any better terms which might be granted to other 
railway contractors (Article 7). “The effect of this 
undertaking,” said the Chinese official statement of 1915, 
“is to transfer the capital originally held by the Chinese, 
as well as the full control and administration of the rail- 
way, to the Japanese.” 8 By the exchange of notes on 
October 5, 1913,?° Japan obtained the railway concessions 
from Supingkai via Chengchiatun to Taonanfu, from 
Kaiyuan to Hailungchang, and from Changchun to Tao- 
nanfu. By the preliminary agreement for loans to build 
four railways in Manchuria and Mongolia on September 
28, 1918,*° the construction of the four railways was con- 
tracted, from Jehol to Taonan, from Changchun to Tao- 
nan, from Kirin via Hailung to Kai-Yuan, and from a 
point between Jehol and Taonan to some point on the sea- 
coast. All these railway concessions, with the single ex- 
ception of the Taonanfu-Jehol Railway and the railway 
connecting a point on the Taonanfu-Jehol Railway with 
a seaport, are to be outside of the scope of the New In- 
ternational Banking Consortium.*t Aside from these, 
under the Terauchi Cabinet, the Kirin-Hueining Rail- 
way loan was contracted in 1918,°* and a loan of 30,- 
000,000 Yen was made with all the forests and gold 
mines in Kirin and Heilungkiang as securities.** In the 
same year, a concession for continuing the Kirin-Chang- 
chun line to the Korean border was granted.** 

More than these, the Treaty of May 25, 1915, respect- 
ing South Manchuria and Eastern Inner Mongolia, con- 


198 THE POLICY OF JAPAN IN CHINA 


ferred greater economic privileges on the Japanese in 
South Manchuria than ever before. The terms of the 
South Manchuria Railway and the Antung-Mudken rail- _ 
way are to be extended to ninety-nine years (Article 1). 
The whole of South Manchuria is to be opened to the 
Japanese (Article 3). Japanese subjects are to be per- 
mitted to lease, by negotiation, land necessary for build- 
ing, trade, manufacture and farming (Article 2).2° The 
term “lease by negotiation” is understood “to imply a 
long term lease of not more than thirty years and also the 
possibility of its unconditional renewal.” ** Finally, the 
Japanese subjects are granted privileges to prospect and 
select mines in the following areas in South Manchuria: *7 


FENGTIEN 

Locality District Mineral 

Nisin’ Alin inion a Pen-Osiccn a cty reek Coal 

Shins shih att Kou Wi) eis nei aia as coe cf 

Sha sung, Wane rie) ELAN ai enitotk t i 

Mien Chane eek ene area) is ie Ne 

Nian iii lang vec. Chin ye a aoa 

An Shan Chan Region From Liaoyang to “ 
Pen-leicy, soean Tron 

KIRIN (southern portion) 

Locality District Mineral 

Sha Sung Kang ...... PLONE une Coal & Iron 

ONS YOO wis ee a Chi-lin (Kirin) ...Coal 

Chia vhs on iin yuk AUa-HeN nae na Gold 


Turning now from South Manchuria to Shantung, we 
see Japan pursuing the same policy of economic exploita- 
tion. As we have seen, by the Treaty of May 25, 1915,%8 
respecting Shantung, she caused China to agree “to give 
full assent to all matters upon which the Japanese Goy- 
ernment may hereafter agree with the German Govern- 
ment relating to the disposition of all rights, interests and 
concessions which Germany, by virtue of treaties or other- 


POLICY OF ECONOMIC EXPLOITATION 199 


wise, possesses in relation to the Province of Shantung”’ 
(Article 1), thus virtually compelling the Chinese Gov- 
ernment to a full assent to the contemplated succession 
of Japan to the German rights in Shantung. By Articles 
156, 157, 158 of the Treaty of Peace with Germany 
signed at Versailles on June 28, 1919, she obtained the 
transfer by Germany of all the German rights in Shan- 
tung, including the lease of Kiaochow, the submarine 
cables from Tsingtau to Chefoo and from Tsingtau to 
Shanghai, the Tsingtau-Tsinan Railway and the adjoin- 
ing mines. Thus, she made herself the sole successor to 
Germany in that Province. 

Pursuing the policy of economic exploitation in Shan- 
tung, as elsewhere, the Tsingtau-Tsinan line yielded in 
1917-1918 gross receipts of 8,196,146 yen as against an 
expenditure of 6,155,627 yen, making a total profit in 
that year of 1,644,519 yen.2® Apart from this railway 
in operation, Japan has obtained by the Treaty of May 
25, 1915, a concession to finance the railway from Che- 
foo or Lungkow connected it with the Kiaochow-Tsin- 
anfu Railway (Article 2) ;*° and by the Treaty of Sep- 
tember 28, 1918, the concessions of the Chinan-Shunteh 
and Kaomi-Hsuchow Railways.* 

In addition, she controls the mines in Shantung for- 
merly belonging to the Germans. The Chunghsiang Col- 
liery has an established annual output of 250,000 tons, 
the Hungshan mines 800,000, the Poshan mines 250,000, 
the Shantung Besybau 560,000, and the Tzechuan Col- 
liery 1,000,000.4° The Fangtze Colliery is, however, not 
so promising. It contains 528 square kilometers of coal 
deposit, but it is estimated that it will yield only one 
million tons more.** The Chinlingchen iron mines have 
a deposit of 310 square kilometers, and the quality and 
quantity are promising.** 

Respecting the industrial progress of Tsingtau made 
under the Japanese Administration, the Japan Year Book 
says: * 


200 THE POLICY OF JAPAN IN CHINA 


“In Tsingtau alone exist about twenty-five factories 
of note backed by a capital of 50 million yen. Contrasted 
with the 17 years of German rule, during which time 
Tsingtau had only one beer brewery and two egg pow- 
der manufacturing companies, the development made 
during the last few years in this direction may be said 
to have been marked. These new enterprises are mostly 
Japanese and include milling, brewery, tanning, packing, 
soap making, oil, match and salt manufacturing, etc. The 
electric works are government monopoly.” 

\ 

Passing from Shantung, the next field of exploitation 
to be considered is the Hanyehping Company and its ac- 
cessories, a company composed of the Hanyang Iron 
Works, the Tayeh Iron Mines and Pinghsiang Colliery, 
corresponding in significance and influence to the Bethle- 
hem Steel Corporation. The Tayeh iron field is among 
the richest in the world. “It consists of a range of nine 
low hills, containing sixty-seven percent of iron ore. 
The official Japanese survey of the mine proper states 
that the iron vein is 265 feet thick and of immeasurable 
length and depth, the amount of ore being estimated at 
700,000,000 tons.** It yields an annual output of 700,000 
tons.*7 The Pinghsiang coal field in Kiangsi covers a 
total area of over 200 square miles, of which only twenty- 
one square miles are yet being worked. It has a pos- 
sible supply of 500,000,000 tons and an annual output of 
750,000 tons.*8 

Before the Chinese Revolution, Japan had contracted 
with the company for the supply of pig iron and iron 
ores, which went to the Japanese Imperial Iron Works 
at Wakamatsu. During the Revolution, when the Han- 
yehping was closed, the Japanese Imperial Iron Works 
at Wakamatsu had to stop and make contracts with the 
Tata Company at Bombay.*® After the revolution, in 
1913, Japan effected a loan of less than £2,000,000 to the 
Hanyehping Company through Shen Kun-pao, the largest 
share-holder of the Hanyehping. Yuan Shih-Kai vetoed 


POLICY OF ECONOMIC EXPLOITATION 201 


the loan agreement as being contrary to the mining laws 
of 1913, but it was of no avail, as the decree was issued 
after the contract had been concluded.*° 

The Japanese Loan was made upon the security of the 
property of the company, and on these conditions: First, 
the Hanyehping Company shail repay it in forty years 
by sale of fifteen million tons of iron ore and eight mil- 
lion tons of pig-iron in addition to the amount already 
contracted for. Second, the Japanese shall have pref- 
erence in future loans. Third, the company shall employ 
a Japanese “highest engineering adviser” and an “auditor 
adviser.” Further, the title deeds of the Company shall 
be deposited in a safe having two keys, of which the 
Japanese shall hold one. By means of this loan trans- 
action, thirty-three percent of the entire output of iron 
ore and about fifty percent of the entire yield of pig-iron 
are at present to go to Japan annually; and this in spite 
of the rise in value of these exports from two million 
- taels in 1913 to nineteen million taels in 1918." 

As this loan did not give Japan the control of the 
Company, a Sino-Japanese Corporation was formed, tak- 
ing over the interests of Shen Kun-pao; but the Chinese 
mining law of 1913, prohibiting foreigners from owning 
more than fifty percent of the stock of a Chinese mining 
company, prevented the consummation of the plan.** Con- 
sequently, Group Three of the Twenty-one Demands re- 
lating to the Hanyehping Company forced the Chinese 
Government to give assent to a joint enterprise if the 
Japanese and the Chinese capitalists should agree upon 
cooperation in future. The pledge was also secured from 
the Chinese Government “not to confiscate the said com- 
pany, nor, without the consent of the Japanese capitalists 
to convert it into a state enterprise, nor cause it to bor- 
row and use foreign capital other than Japanese.” *4 

Further, Group Three of the original Twenty-one De- 
mands revealed the designs of Japan, not only upon the 
Hanyehping Company, but also as to the mines of the 


202° THE POLICY OF JAPAN IN CHINA 


Central Provinces in the Yangtze Valley,—Hupeh, Hu- 
nan, and Kiangsi. It practically aimed at the monopoly 
of the minerals of these provinces. Article Two of Group 
Three of the original demands read: 


“The Chinese Government agrees that all mines in 
the neighborhood of those owned by the Hanyehping 
Company shall not be permitted, without the consent of 
the said company, to be worked by other persons outside 
of the said company, and further agrees that if it is 
desired to carry out any undertaking which, it is ap- 
prehended, may directly or indirectly affect the interests 
of the said company, the consent of the said company shall 
first be obtained.” °° 


The language of this article was so general that it 
could be practically made to mean the monopoly of the 
mines in Hupeh, Hunan and Kiangsi, where the operations 
of the Hanyehping Company were carried on. The mines 
in the neighborhood of those owned by the Company were 
not to be worked by other persons outside of the com- 
pany, and the neighborhood was purposely left indefinite 
and undefined. Thus, the doors of the Central Yangtze 
provinces would be closed to the mining enterprises of 
any other party but the Hanyehping Company, of which 
Japan sought to make a Chino-Japanese joint concern. 
Again, the second part of the article requiring the con- 
sent of the company for any undertaking which might 
directly or indirectly affect the interests of the said Com- 
pany was worded so vaguely, as to be capable of being 
interpreted to cover all kinds of enterprises that might 
compete with the company or affect its interests in any 
way. This would mean that, throughout China or at 
least Central China, the Hanyehping Company would en- 
joy the monopoly of the iron industry and exclude any 
competitors or conflicting interests. In short, had the 
original article been granted, Japan would have, through 
the instrument of the Hanyehping Company, practically 


POLICY OF ECONOMIC EXPLOITATION 203 


obtained the monopoly of the mines of the Central Yang- 
tze Provinces and a monopoly of the iron industry in 
China. 


Turning from the Hanyehping Company, Japan has in- 
terests in other parts of China. In Anhui Province, the 
Sino-Japanese Industrial Company owns the Taochung 
Iron Mines, having visible ore of 60,000,000 tons—sixty- 
five per cent pure.°® Japan has concessions for large de- 
posits in Fukien near Amoy.®* The Terauchi Cabinet 
also concluded the Communication Bank Loan,®* and the 
Telegraph Loan.®® Japan can also tap the fabulous | 
wealth of Shansi Province by the completion of the Tsi- | 
nan-Shunteh line and the connection of Tsingtau-Tsinan 
Line with the Lung-Hai Railway.® 


In addition to the interests already acquired, Japan has 
made several attempts of greatest significance to exploit 
the riches of China. She sought to obtain the wine and 
tobacco monopoly, both in trade and tax collection, by 
the offer of a loan of 30,000,000 yen.*t Nishihara sought 
to acquire the monopoly of the foreign trade of China 
through the organization of the Chung Hua Trading Co., 
against which the United States protested. In her 
proposal to remit the balance of the Boxer indemnity, the 
Japanese Government stipulated, besides the requirement 
of the presence of a Japanese adviser at the conference 
for considering proposals to be submitted by the Chinese 
Government at the Peace Conference, and of the ab- 
stention from foreign loans other than Japanese dur- 
ing the war, that Japan should direct the use of the in- 
demnity so remitted, and control the export of China’s 
iron, cotton and wool.® Finally, Japan made desperate 
efforts to control still other iron mines of China. The 
Japanese financiers, together with some Chinese, organ- 
ized the Mulling Co., to develop the famous Fenghuang- 
shan iron mines near Nanking, which has sought to obtain 


204 THE POLICY OF JAPAN IN CHINA 


a license from the Chinese Government for the under- 
taking. In 1918, Japan proposed a loan of 100,000,000 
yen on the hypothecation of the various iron deposits in 
China, including those at Lung-Kwan, Shienhwa, Tayeh, 
Yochow, Fenghuangshan and those in Shantung and An- 
hui.** 


In recapitulation, we may state that with respect to 
railway concessions, Japan has dominated South Man- 
churia, Eastern Inner Mongolia and Shantung with stra- 
tegic lines ; that with reference to mines, she owns or con- 
trols the two greatest collieries of China—the Fushan 
and the Pingshiang—and controls about forty per cent 
of China’s total production of coal and over seventy-five 
per cent of the output of modern equipped mines.*%° The 
conclusion may also be inferred that her recent attempts 
indicate her desire to control, if not to monopolize, the 
foreign trade and iron industry of China. Thus, per- 
sistently, Japan has pursued a policy of economic ex- 
ploitation in regard to China, a policy she, quite obviously, 
intends to continue. 


NOTES TO CHAPTER XI 


Statesman’s Year Book, 1900, p. 1018, on December 31, 1918. 
Stateman’s Year Book, 1920, p. 1017. 
K. K. Kawakami, Japan in World Politics, pp. 49-50. 
Statesman’s Year Book, 1920, p. 1018. 
Japan Year Book, 1920-21, p. 538. 
Japan Year Book, 1920-21, p. 538. 
Japan Year Book, 1920-21, p. 538. 
Japan Year Book, 1920-21, p. 559. 
K. K. Kawakami, Japan and the World Peace, p. 163. 
10. Japan Year Book, 1920-21, p. 561. 
11. Japan Year Book, 1920-21, pp. 561-562. 
12. K. K. Kawakami, Japan and the World Peace, p. 164. 
13. U.S. For. Rel., 1905, pp. 825-826 et seq. 
14. Japan Year Book, 1920-21, p. 740. 
Ae reeset Lawton, Vol. 2, p. 1165; Japan Year Book, 1926- 
» Dp. : 
16. Japan Year Book, 1920-21, p. 741, 


SOO EOE Cn St 


POLICY OF ECONOMIC EXPLOITATION - 205 


17. Japan Year Book, 1920-21, pp. 741-742. 

18. Japan Year Book, 1920-21, p. 742. 

19. Japan Year Book, 1920-21, p. 742. 

20. Japan Year Book, 1920-21, p. 741. 

21. Japan Year Book, 1920-21, p. 741. 

22. Japan Year Book, 1920-21, p. 741. 

23. Japan Year Book, 1920-21, p. 743. 

24. Japan Year Book, 1920-21, p. 743. 

25. Hand in hand with the South Manchuria Railway Company 
there is the Manchurian Export Guild. It aims to monopolize the 
foreign trade of Manchuria. For a brief account see Overlack, 
Foreign Financial Control in China, p. 172. 

26. MacMurray, 1907/3; Japan Year Book, 1920-21, p. 743. 

27. Japan Year Book, 1920- 21, p. 743. 

28. The Chino-Japanese Negotiations, 1915, pp. 8-9. 

29. MacMurray, 1913/9. 

30. The Shantung Question, submitted by China to the Paris 
Peace Conference, published by the Chinese National Welfare 
Society of America, March, 1920, p. 69. 

31. Lamont’s Reply to Mr. Kajiwara, President of the Yoko- 
hama Specie Bank, Millard’s Review, October 23, 1920, p. 386; 
Documents Concerning the New Consortium, released to press 
by the Department of State, March 30, 1921, Exchange of Letters 
between Lamont and Kaj iwara, May 11, 1920. 

32. MacMurray, 1918/9. 

33. MacMurray, 1918/11. 

34. Millard, Democracy and the Eastern Question, p. 191. 

35. MacMurray, 1915/8; The Shantung Question, op. cit., p. 30 
et seq. 

36. MacMurray, 1915/8; The Shantung Question, op. cit. ex- 
change of notes respecting the explanation of “Lease by Nego- 
tiation” in South Manchuria, pp. 33-34. 

37. The Shantung Question, op. cit., p. 32; MacMurray, 1915/8. 

38. MacMurray, 1915/8; the Sino-Japanese Negotiations, 1915, 
p. 49 et seq. 

39. Japan Year Book, 1920-21, p. 746. 

40. The Sino-Japanese Negotiations, 1915, p. 50. 

41. The Shantung Question, op. cit., pp. 68 67; MacMurray, 
1918/16. 

42. Pooley, Japan’s Foreign Policy, p. 192. 

43. Asia, Sept. 19, p. 905. 

44. Ibid. 

45. Japan Year Book, 1920-21, p. 746. 

46. Pooley, op. cit., p. 161; Coleman, The Far East Unveiled, 


47. Pooley, op. cit., p. 191. 

48. Pooley, ibd., p. 162. 

49. Pooley, ibid., p. 162. 

50. Pooley, ibid., p. 162. 

Sige tis KK. Tong, art. on Japan’s Railway Program in China, 
Millard’s Review, June 12, 1920; Coleman, op. cit., p. 63 et seq. 


206 THE POLICY OF JAPAN IN CHINA 


52. H. K. Tong, art. on Japan’s Railway Program in China, 
Millard’s Review, June 12, 1920, p. 65. 

53. Pooley, op. cit., pp. 162-163. 

Pe; The Sino-Japanese Negotiations, pp. 67-68; MacMurray, 
1915/8. 

55. The Sino-Japanese Negotiations, 1915, p. 21 

56. Pooley, op. cit., p. 191. 

57. Millard’s Review, June 23, 1917, pp. 67-69. 

58. MacMurray, 1917/9. 

59. MacMurray, 1918/7. 

60. For a list of loans made by the Japanese from January 1, 
1909, to October 25, 1918, see Millard, Democracy and the Eastern 
Question, p. 187. 

61. H. K. Tong, art. on Japan’s Seeking China’s Tobacco 
Monopoly, Millard’s Review, June 8, 1918, p. 49 et seq. 

62. H. K. Tong, article on America Protests Against the 
Chinese Trading Monopoly, Millard’s Review, November 9, 1918, 
p. 388 et seq. 

63. H. K. Tong, article on Japan’s Conditions for Remitting 
Her Share of Boxer Indemnity, Millard’s Review, October 26, 
1918, p. 303 et seq. 

64. H. K. Tong, article on Japan’s Newest Intrigue for Pos- 
session of China’s Iron Mines, Millard’s Review, January 18, 
1919, p. 233 et seq. 

65. Pooley, Japan’s Foreign Policy, p. 192. 


XII 
THE POLICY OF TERRITORIAL EXPANSION 


As we have already indicated, the policy of territorial 
expansion is one of two ways for solving the population 
problem of Japan. Barred by the Gentlemen’s Agree- 
ment with the United States, and by the colonies of Great 
Britain, Japan was forced to alleviate the congestion 
and consequent economic misery of surplus population, 
by finding an outlet on the Asiatic mainland. Confined 
within the narrow limits of her small islands, she was 
in constant fear of being some day deprived of any 
channels of expansion and smothered. Unless she face 
stagnation, congestion, and misery, she must seek some 
territory to which she can send her surplus sons and 
daughters. 

Searching for an outlet, she finds that her first avail- 
able region of colonization is her own northern Island, 
- Hokkaido, which can hold five times as many people 
as its present population of 2,200,000.1. But the Island 
is mountainous and its winter severe and protracted. 
The second available territory is Korea, which can at 
least support twice as many people as her present popu- 
lation of about 15,000,000. But Korea has a density of 
population of 169 per square mile and offers no great 
attraction for Japanese settlers.2 The third region that 
Japan logically looks to for amelioration on the main- 
land is South Manchuria. Though as thickly populated 
as Korea, great natural resources and the fertility of the 
soil nevertheless offer many attractions for Japanese 
colonization. 

Aside from the natural attraction afforded by the 
country, Japan feels that she has a special claim to South 

207 


208. . THE POLICY OF JAPANAIN CHINA 


Manchuria. By the Sino-Japanese War, she obtained 
possession of the Liaotung peninsula forming the pro- 
jection of the southern half of Manchuria, but because 
of the tripartite intervention she was constrained to dis- 
gorge this territory. Though deprived of the cession, 
she still cherishes the desire and hope of some day re- 
gaining it. What is more, she fought Russia and so 
saved South Manchuria from her clutches. She staked 
her whole national existence on the struggle; she spent 
about a billion yen and lost over one hundred thousand 
lives. Therefore, 


“Considering that every inch of South Manchurian soil 
was soaked with Japanese blood and that their coffers 
were left sadly depleted by the war, it would not have 
been surprising if the Japanese in the wake of the great 
conflict had been tempted to regard Manchuria as their 
own territory by right of conquest, and to adopt these 
discriminating measures calculated to advance their 
trade/cé 


Again, it was said: 


“Manchuria is consecrated to Japan by the blood of 
dead Japanese soldiers.” 4 


Furthermore, the traditional ambition for a Greater 
Japan impels the government to the policy of territorial 
expansion in the direction of Eastern Asia. Yoshida, 
the great teacher of “Patriotic Schools,” among whose 
famous disciples were Kido, Inouye and Ito, advocated 
the expansion of Japan in Asia by force of arms. His 
program included the acquisition of the Kurile Islands, 
Saghalien, Kamchatka, Formosa, Korea, Manchuria, and 
a large part of Eastern Siberia—with a view to the ex- 
pansion of Japan into an Eastern Asiatic power.® 


For these reasons therefore—the economic pressure of 
surplus population, the special claim to South Manchuria 


POLICY OF TERRITORIAL EXPANSION 209 


and the traditional ambition of a Greater Japan—the 
Yamato race has set her heart on the domination, if 
not the annexation, of South Manchuria. Professor 
Tomizu, M.P., of the Tokio Imperial University, said 
in 1912," “the present is the best possible occasion for 
the solution of the South Manchuria question, which 
Japan must settle sooner or later. She has already missed 
several opportunities for annexing Manchuria, and the 
longer the solution is postponed the more difficult it 
becomes.” In the memorandum submitted by the Black 
Dragon Society advocating a defensive alliance between 
Japan and China, which was believed to be the fore- 
runner of the Twenty-one Demands, among the terms 
set forth there was the provision which betrayed the 
intention to seize the sovereign rights of South Man- 
churia and Eastern Inner Mongolia: “China agrees to 
recognize Japan’s privileged position in South Man- 
churia and Inner Mongolia and to cede the sovereign 
‘rights of these regions to Japan to enable her to carry 
out a scheme of local defense on a permanent basis.” § 
Thus, bent on the control, and if possible, the posses- 
sion of South Manchuria and Eastern Inner Mongolia, 
Japan used, as the basis of her expansion, Article 6 of 
the Railroad Convention between Russia and China of 
1896,° which she had inherited from Russia by virtue of 
the cession of the Southern Portion of the Chinese East- 
ern Railway from Changchun to Dalny and Port Arthur, 
and by virtue of the confirmation of the transfer by the 
Chinese Government by the Treaty of December: 22, 
1905,*° providing that Japan’s rights in South Manchuria 
should, “as far as circumstances permit, conform to the 
original agreements concluded between China and Rus- 
sia” (Article 2). Article 6 of the original grant to Russia 
read: “la société aura le droit absolu et exclusif de l’ad- 
ministration de ses terrains.” *4 By virtue of this article, 
although the original grant was qualified by special pro- 
visions for the protection and preservation of the Chinese 


210) CHE POLICY SO} TARA NBN ETN 


sovereignty,!? she exercised actual sovereignty over the 
railway zone of 70.54 square miles.1* She permitted no 
Chinese soldiers and police to enter the zone except with 
special permission, and on the other hand, she maintained 
exclusive police and military guards within the zone.* 
Thus, she divided the sovereignty of South Manchuria by 
means of this narrow strip of railway zone which is 
entirely under Japanese jurisdiction, or, to use another 
expression, she thus created an imperium in imperio, 
which could be used for the future expansion of Japa- 
nese jurisdiction over South Manchuria. Further, she 
established Japanese settlements at most of the stations 
along the railway and attempted thereby to found a series 
of Japanese towns.—‘‘Thus, there will be a strip of ter- 
ritory running through the heart of South Manchuria 
which to all intents and purposes will become a Japanese 
Colony.” * 


More than this, she adopted the policy of settlement 
under the Japanese jurisdiction and sovereignty. By 
stretching the interpretation of the extra-territorial rights, 
she established police boxes, and even jails and houses 
of detention in connection with her consulates. She main- 
tained that the assumption of the police power over her 
own subjects was but a corollary of extra-territorial juris- 
diction, which, however, was not claimed by the other 
treaty Powers enjoying similar privileges: 


“In short, the establishment of stations for Japanese 
police officers in South Manchuria and Eastern Inner 
Mongolia is based on consular jurisdiction and its aim is 
efficiently to protect and discipline Japanese subjects, to 
bring about a completely satisfactory relationship between 
the officials and people of the two countries, and gradu- 
ally to develop the financial relations between Japan and 
China. The Chinese Government is requested speedily to 
recognize the demands precisely as it has the establish- 
ments of consulates and consular agents in the interior 


POLICY OF TERRITORIAL EXPANSION 211 


of South Manchuria in pursuance of the policy to main- 
tain the friendly relations between China and Japan.” 1* 


And, maintaining that contention, she made repeated 
attempts to secure the recognition of the right to sta- 
tion police in South Manchuria and Eastern Inner Mon- 
golia. On October 18, 1916,7° she submitted this demand: 


“According to the new treaty concluded last year re- 
specting South Manchuria and Eastern Inner Mongolia, 
Japanese subjects shall have the right of residence, travel 
and commercial and industrial trade in South Manchuria 
and the right to undertake agricultural enterprises and 
industries incidental thereto in the Eastern part of Inner 
Mongolia jointly with Chinese subjects. The number of 
Japanese subjects in South Manchuria and Eastern Inner 
Mongolia will, therefore, inevitably increase gradually. 
The Imperial Government of Japan considers it necessary 
to station Japanese police officers in these regions for the 
purpose of controlling and protecting their own subjects. 
It is a fact that a number of Japanese police officers have 
already been stationed in the interior of South Manchuria 
and they have been recognized by the local officials of 
the localities concerned since intercourse has been con- 
ducted between them. The Imperial Government of Japan 
proposes gradually to establish additional stations for Jap- 
anese police officers in the interior of South Manchuria 
and Eastern Inner Mongolia whenever and wherever 
necessary.” 


Thus, Japan aimed to extend her sovereignty wherever 
her subjects should go in South Manchuria and Eastern 
Inner Mongolia. Following this policy to its logical 
conclusion, and especially in view of the fact that the 
whole of South Manchuria has been thrown open to 
Japanese subjects by the Treaty of May 25, 1915, respect- 
ing South Manchuria and Eastern Inner Mongolia (Ar- 
ticle 3), she can extend her sovereignty, wherever her 
subjects go. Thus, under the guise of peaceful settle- 


212 “THE POLICY OF JAPAN WN CHINE 


ment, the process is, in reality, a political invasion, paving 
the way for territorial absorption. 


Not contented with the policy of settlement under 
Japanese jurisdiction and sovereignty, Japan, in 1915, 
made the bold attempt to capture the sovereignty of South 
Manchuria and Eastern Inner Mongolia by means of the 
Twenty-One Demands. In group Two of the original 
demands, Article Two provided for the Japanese owner- 
ship of land. It read: “Japanese subjects in South Man- 
churia and Eastern Inner Mongolia shall have the right 
to lease or own land acquired either for erecting suitable 
buildings for trade and manufacture or for farming.” 
Land in South Manchuria and Eastern Inner Mongolia 
being very cheap, the grant of the privilege of owning 
it would give her and her subjects the opportunity to own 
the entire territory of these two regions by systematic 
purchase and manipulation of land prices through Japa- 
nese banks operating therein. The Chinese Official State- 
ment of 1915 regarding the Chino-Japanese negotiations 
on the Twenty-one Demands said: “Should Japanese sub- 
jects be granted the right of owning land, it would mean 
that all the landed property in the region might fall 
into their hands, thereby endangering China’s territorial 
integrity.” °° 

Side by side with the demand for the right to own 
land, Japan demanded the exercise of police power in 
important places in China. In Group V, Article 3, of the 
original demands, we read: 


“Inasmuch as the Japanese Government and the 
Chinese Government have had many cases of dispute 
between Japanese and Chinese police to settle cases which 
caused no little misunderstanding, it is for this reason 
necessary that the police departments of important places 
(in China) shall be jointly administered by Japanese 
and Chinese, or that the police departments of these 
places shall employ numerous Japanese, so that they may 


POLICY OF TERRITORIAL EXPANSION 213 


at the same time help to plan for the improvement of 
the Chinese Police Service.” 


As the police power is a concrete symbol of sovereignty, 
this demand for the joint administration of police is 
tantamount to a demand for the sovereignty of China. 
While, however, the demand covered the whole of China, 
it was meant to apply particularly to South Manchuria 
and Eastern Inner Mongolia. The Chinese official state- 
ment of 1915 regarding the negotiations runs as follows: 


“The proposal that there should be joint administra- 
tion by China and Japan of the police in China was 
clearly an interference with the republic’s domestic affair, 
and consequently an infringement of her sovereignty. 
For that reason the Chinese Government could not take 
the demand into consideration. But when it was ex- 
plained by the Japanese minister that this referred only 
to South Manchuria, and he suggested that his govern- 
ment would be satisfied if China agreed to engage Japa- 
nese police advisers for that territory, the Chinese Gov- 
ernment accepted the suggestion.” 24 


Whatever the intention of this demand, had it been 
granted, Japan would have acquired the power of jointly 
administrating the police in important places of China, 
especially in South Manchuria and probably Eastern Inner 
Mongolia, which would have virtually meant the cession 
of sovereign rights in these regions,—which the Black 
Dragon Society had petitioned the Japanese Government 
to obtain. Coupled with the right of owning land, such 
an arrangement would have rendered the regions in ques- 
tion actual colonies of Japan. 

Failing in this move, Japan made of the Changchiatung 
Affair another attempt to wrest the sovereignty of South 
Manchuria and Eastern Inner Mongolia from the hands 
of the Chinese Government. Barring the usual satis- 
faction for the Changchiatung Affair, she demanded the 
employment of Japanese military advisers in South Man- 


214. THE POLICY OF JAPAN IN CHINA 


churia, and of military instructors in the Cadet schools, 
and the establishment of police stations in South Man- 
churia and Eastern Inner Mongolia.2?, Had these de- 
mands been conceded, it would have meant the Japanese 
control of the military development of South Manchuria 
and granting of the police power over Japanese subjects 
in South Manchuria and Eastern Inner Mongolia. 


Finally, when the new Consortium was being organized 
in 1919-1920, Japan qualified the participation of her 
financial group with the reservation that South Manchuria 
and Eastern Inner Mongolia should be excluded from 
its scope.”**4 Thus, by this diplomatic stroke, she at- 
tempted to secure the recognition of the Great Powers as 
to her special political status in these regions and her 
right to exclusive exploitation of the same. Hence, if 
China should in the future come under the control of 
the New Consortium and thus lose her independence, 
Japan would have saved these two regions from a similar 
fate, and would be free to snatch them from the grip 
of the Consortium and incorporate them under her own 
sovereignty.”® 


It is, therefore, reasonable to conclude that Japan did 
entertain the design of controlling, if not of possessing, 
South Manchuria and Eastern Inner Mongolia. Im- 
pelled by the economic pressure of an increasing popu- 
lation at home, supported by the special claim growing 
out of the Russo-Japanese War, and inspired by the tra- 
ditional ambition of a Greater Japan, she has set her 
heart on the policy of territorial expansion in these two 
regions. Using Article Six of the Russo-Chinese Rail- 
way Convention of 1896 as a basis, she planned to extend 
her sovereignty over these regions, by the creation of the 
imperium in imperio in the railway zone, the establish- 
ment of police stations, and the repeated attempts to wrest 
the police power from the Chinese Government.?¢ 


POLICY OF TERRITORIAL EXPANSION 215 


NOTES TO.CHAP TER CAL 


1. K. K. Kawakami, Japan in World Politics, p. 58. 

2. ibid. p: 58. 

3S. Lbid.) p13]. 

4. Patrick Gallagher, America’s Aims and Asia’s Aspirations, 
3 5. J. O. P. Bland, article on Moral Factors in Japanese 
Hig i Asia, March, 1921, p. 217. 

John Spargo, Russia as an American Problem, p. 150. 

- Shin Nihon, editor, Count Okuma, April, 1912, quoted in 
Pooley, Japan’s Foreign Policy, p. 76n. 

8. Putnam Weale, The Fight for the Republic in China, pp. 
130-131. 

9. MacMurray, 1896/5. 

10. MacMurray, 1905/18. 

11. The society shall have the absolute and exclusive right of 
administration of its territories. 

12. Cf. U. S. Foreign Relations, 1910, pp. 203-205, the letter 
of the Secretary of State of the United States Government to 
the Russian Ambassador on April 9, 1908. 

13. Hornbeck, Contemporary Politics in the Far East, p. 268. 

14. Ibid., p. 268; Millard’s Review, Nov. 8, 1919, p. 399. 

: ae Lancelot Lawton, The Empires of the Far East, Vol. 2, p. 

16. MacMurray, 1917/2; W. W. Willoughby, Foreign Rights 
and Interest in China, pp. 84-85; Japanese Minister’s Aide 
Memoire, Oct. 18, 1916. 

18. MacMurray, 1917/2; W. W. Willoughby, op. cit, p. 83 et 


19. The Sino-Japanese Negotiations, 1915, p. 20. 

eo Abid. p. 12. 

21. Ibid., pp. 9-10. 

Pe. MacMurray, 1917/2. 

23. T. W. Lamont, Preliminary Report on the New Consortium 
for China, p. 7. 

24. Documents concerning the new consortium released to 
press by the Department of State on March 30, 1921, the letter 
of M. Odagiri of the Yokahoma Specie Bank to Mr. T 
Lamont of the J. P. Morgan & Co., June 18, 1919, 

25. For a complete account of the new consortium, vide infra, 
chapters on the New International Banking Consortium. 

26. Japan’s recent occupation of Eastern Siberia may or may 
not effect her policy of territorial expansion in South Man- 
churia and Eastern Inner Mongolia. For an account of Japan 
and Siberia, see John Spargo, Russia as an American Problem, 
Chapter V, p. 199 et seq. 


XIII 
THE POLICY OF PARAMOUNT INFLUENCE 


In the two preceding chapters we have examined the 
policies of economic exploitation and territorial. expan- 
sion,—two of Japan’s solutions for her population prob- 
lem. We come, now, to the third policy—that of para- 
mount influence. 

This policy is actuated in the first place by Japan’s 
desire to obtain and possess the largest Chinese sphere 
of influence. Being China’s closest neighbor and of the 
same racial and linguistic family, she feels that she ought 
‘to have the largest influence. When the battle of con- 
cessions commenced in 1898—which resulted in the Pow- 
ers demarcating their respective spheres of influence on 
the map of China—Japan was not yet a full-fledged 
Power. She had therefore to be content with the de- 
marcation of Fukien as her humble share. When, by 
dint of extraordinary exertion, and by reason of her vic- 
tory over Russia, she had achieved the position of a 
great Power, she found, to her regret, that all the re- 
gions in China had already been occupied as spheres of 
other Powers, and she had again to be contented with 
South Manchuria which she had won by the sword and 
Eastern Inner Mongolia attained by cordial agreement 
with Russia. When, however, the World War broke 
out, leaving China free for her expansion, she promptly 
seized the opportunity and extended her sphere of influ- 
ence as far as China and the other Powers would allow 
her. This she did, partly to the end that in case of an 
eventual break-up or partition of China, she would be 
able to secure the largest share of territory. “It was 
because European Powers were bent upon dividing China 

216 


POLICY OF PARAMOUNT INFLUENCE 217 


into so many spheres of influence that Japan was obliged 
to step in and take such measures as might be neces- 
sary to safeguard her position in the Far East against 
any emergency that might arise from an unhappy con- 
dition in China.” + 

This policy is again a concomitant of Japan’s other 
policies—economic exploitation and territorial expansion. 
Economic exploitation requires the existence of a sphere 
of influence, and quite logically, the fullest measure of 
economic exploitation requires the possession of the 
largest sphere of influence. In order, therefore, to carry 
out this policy to the fullest satisfaction, the acquisition 
of the largest sphere of influence is highly desirable, if 
not quite necessary. Likewise, territorial expansion de- 
mands the existence of a sphere of influence wherein a 
Power entrench itself against the authority of the ter- 
ritorial sovereign and the intrusion of other Powers. 
While it is not indispensable, the possession of the largest 
sphere of influence will nevertheless help to consummate 
the annexation of the regions desired. 

In the case of Japan and China this policy is ani- 
mated by the former’s desire to displace the predominat- 
ing Western influence by her own paramount interest. 
She feels chagrined over the presence of such an influ- 
ence in a land where, by virtue of the similarity of lan- 
guage and race, she feels that she ought to have the 
largest share. She is also afraid that the presence of 
a dominating Occidental influence may imperil the inde- 
pendence of China and so jeopardize her own existence. 
Therefore, to check the further extension of such an 
influence, she proposes to displace it with her own para- 
mount interest. Supporting this view is the following 
statement : 


“It must be frankly admitted that ever since China 
opened her doors to Western nations, her territory has 
been regarded as a happy hunting ground by concession 


218) THE POLICY: OR SJABAN ENGGEIN A: 


seekers of all, but especially of European countries. Her 
inefficiency, her impotency and the general disorgani- 
zation and corruption of her administrative system have 
been such as to invite a veritable universal scramble over 
concessions. . . . To the Japanese, it is certain that, un- 
less they take the necessary measures of precaution, the 
whole province of China will sooner or later be held in 
the grip of Western interests. Of course she could not, 
even if she would, undertake to safeguard all the vast 
dominion of China, but she must by all means forestall 
the establishment of preponderating Western influence 
in such sections of that domain as are contiguous or 
adjacent to her own territories.” 7° | 


This policy is, moreover, motivated by Japan’s consid- 
eration of her own special position in China. She fought 
war with Russia, partially because of China’s incapacity 
to resist Russian aggression in Manchuria. By dint of 
supreme sacrifice, she saved Manchuria, and so rendered 
China a distinct and invaluable service. She also feels 
her exalted mission of Chinese guardianship. Being the 
only nation in Eastern Asia that has been able to resist 
successfully the Western onslaught, she feels that she 
has the duty of extending her protection to the other 
nations of Eastern Asia, particularly China. Further, 
her own economic, and to a certain extent, her own politi- 
cal existence depends upon China’s prosperity and inde- 
pendence. Should her neighbor ever come under West- 
ern control, or what is worse, should she ever be par- 
titioned, Japan would be left alone in the world. With 
the Western Powers entrenched on the opposite shore 
of her sea, her own days of independence would be num- 
bered. As preserver of Manchuria and protector of 
China, dependent as she is upon her and inseparately 
interwoven as is her destiny and well-being with that 
of China, she is therefore impelled by a high sense of 
justification to put forth her claim of a special position 
in that country. 


POLICY OF PARAMOUNT INFLUENCE 219 


Turning now to the ways in which this policy has been 
executed, we find that Japan first established her para- 
mount influence in South Manchuria. As we have seen, 
soon after she had obtained the transfer of the railway 
and mine leases, she organized the South Manchuria Rail- 
way Company, which is the Japanese Government all but 
in name and which dominates the economic life of South 
Manchuria. Besides this, she closed the door of South 
Manchuria to the railway enterprises of other nations. 
She vetoed the Hsinminting-Fakuman concession granted 
to British interests in 1907, by producing a secret agree- 
ment alleged to have been signed in connection with the 
Treaty of December 22, 1905, pledging’ the Chinese 
Government not to construct, prior to the recovery 
by them of the said railway (the South Manchuria 
Railway), any main line in the neighborhood of and 
parallel to that railway, or any branch line which 
might be prejudicial to the interest of the above men- 
tioned railway.* 

The great extension, however, of her sphere of influ- 
ence came when the World War broke out. To repeat, 
she first ousted Germany from Shantung and seized all 
German interests—leaseholds, railways, mines, cables— 
and this in violation of the sovereignty of China. Hav- 
ing accomplished this, she presented the now celebrated 
Twenty-one Demands, which, had they been fully 
granted, would have given her the largest sphere of in- 
fluence or the position of paramount influence. By 
Group I, she demanded the assent of the Chinese Gov- 
ernment to any arrangement Japan might make with Ger- 
many at the end of the war relating to the German 
rights in Shantung (Article 1).°** By Articles 156, 157, 
and 158 of the Treaty of Peace with Germany signed 
at Versailles, June 28, 1919, she was made the sole 
successor to all German interests and rights in Shan- 
tung, thus adding this Province to her sphere of in- 
fluence. 


220 THE POLICY OF JAPAN IN CHINA 


Not only this, but by Group II of the original Twenty- 
one Demands, she demanded the right of owning land 
in South Manchuria and Eastern Inner Mongolia, which, 
coupled with the demand for the police power in “im- 
portant places” in China, would, in due course of time, 
have made South Manchuria and Eastern Inner Mon- 
golia Japanese territories. Again, according to the same 
group of demands, she attempted to put Eastern Inner 
Mongolia on the same status as South Manchuria, which 
was, however, successfully frustrated by the skill of 
the Chinese diplomats, who caused Japan to be content 
with the mere opening of some commercial ports in that 
region. Notwithstanding the failure of these deeper de- 
signs, she was nevertheless successful, by the Treaty of 
May 25, 1915, in tightening her control over South Man- 
churia and Eastern Inner Mongolia. For contracting for- 
eign loans for the construction of railways in South 
Manchuria and Eastern Inner Mongolia and for pledg- 
ing the taxes of these two regions as securities for loans, 
Japan had first to be consulted. “If foreign advisers 
or instructors on political, financial, military or police 
matters are to be employed in South Manchuria, Japa- 
nese may be employed first.” 7 

In addition, by Article 6 of Group V, Japan attempted 
to consolidate her position in Fukien and make the prov- 
ince an exclusive sphere of influence. The Article read: 
“If China need foreign capital to work mines, build 
railways and construct harbor works (including dock- 
yards) in the Province of Fukien, Japan shall be first 
consulted.” * Had this demand been fully granted, Japan 
would have closed another door—and this time in the 
Province of Fukien. The final exchange of notes, how- 
ever, gave only a voluntary declaration, on the part of 
the Chinese Government, in response to the Japanese 
inquiry, that no permission to foreign nations had been 
given, nor had foreign loans been contemplated, “to con- 
struct on the coast of Fukien Province, dock-yards, coal- 


POLICY OF PARAMOUNT INFLUENCE 221 


ing stations for military use, naval bases, or to set up 
other military establishments.” ® 


Furthermore, Japan also attempted, by the original 
Twenty-one Demands, to extend her influence into the 
Yangtze Valley, thus invading the British sphere. As 
will be recalled, by Group III relating to the Hanyehping 
Company, besides the privilege of joint concern, she de- 
manded the monopoly of mines in the neighborhood of 
those owned by the company (Art. 2), which, had it been 
granted, would have given her the monopoly of the 
mining privileges of the Central Yangtze Provinces, thus 
excluding Great Britain, with reference to mining enter- 
prises, from her own sphere.t? What is worse, by Arti- 
cle 5 of Group V,™" she demanded the right of construc- 
ing certain railways in the Yangtze Valley. “The demand 
of railway concessions in the Yangtze Valley,” said the 
Chinese Official Statement of 1915, “conflicted with the 
Shanghai-Hangchow-Ningpo Railway of March 6, 1908, 
the Nanking-Changsha Railway agreement of March 31, 
1914, and the engagement of August 24, 1914, giving 
preference to British firms for the projected line from 
Nanchang to Chaochowfu.” Thus, had this demand 
been granted, Japan would have added to her sphere of 
influence the Southeastern Provinces of China. 

Moreover, when the Russian Soviet Revolution oc- 
curred in 1917, resulting in the recession of Russian 
influence from North Manchuria and Outer Mongolia, 
Japan again took advantage of the situation and at- 
tempted to extend her influence into North Manchuria. 
She dispatched troops to occupy and guard the Chinese 
Eastern Railway, and this in spite of the fact that the 
protection of the railway was distinctly assigned by the 
Inter-allied Agreement concerning the guarding of the 
Chinese Eastern Railway, to the Chinese Government, 
which had well performed the task.1* Simultaneously 
with the coup of Vladivostok, she increased the number 


P22.’ ‘THE POLICY (OF JAPAN FN Grin a 


of her troops along the Chinese Eastern Railway. To 
find an excuse for their presence, she instigated bandits 
and gave them aid to break down Chinese authority along 
the railway.44#*°"* And it was only the Inter-allied Rail- 
way Technical Commission that prevented Japan from 
openly seizing it, as she had the Tsingtau-Tsinan: Rail- 
way.’778 It was said: 


“Supreme efforts are being made by China to persuade 
Paris, London and Washington not to dissolve the Inter- 
ally Railway Technical Commission in Siberia for the 
simple reason that China is fully convinced that Japan 
will seize the Chinese Eastern Railway immediately fol- 
lowing the abolition of the Commission. The Japanese 
do not intend to withdraw their troops until they have 
exhausted every means to get control of this railroad. 
It is therefore up to the Peking Government to do its 
utmost to preserve for China one of the most important 
railways within her domain. . . . Simultaneously with 
the coup at Vladivostok, the Japanese forces along the 
whole Chinese Eastern Railway were increased and it 
looked as if the operation of the line would be usurped 
by the Japanese authorities. The resistance of the Inter- 
allied Commission alone was responsible for the pre- 
venting of such a development... .” 


Apart from the extension of her sphere of influence, 
Japan also aims to win the predominance of trade. When 
the great war came and European competitors tempo- ~ 
rarily disappeared, she forged her way straight ahead 
until she became a formidable rival of Great Britain— 
who is also bent on trade predominance. Had it not been © 
for her loss of China’s goodwill, due to the Twenty-one 
Demands in 1915 and for the boycott subsequent to the 
Shantung Decision in 1919, she would have probably, 
by this time, outstripped all other commercial rivals in 
China. The following available statistics show that, 
from 1913 to 1917, she almost doubled her share in the 
total percentage of China’s foreign trade: 


POLICY OF PARAMOUNT INFLUENCE 223 


TABLE SHOWING PERCENTAGES OF TRADE WITH CHINA, 
1915 to 1917 
1913 1914 1915 1916 1917 
Tia. 19-7 ©) Stile eas aes Gun asd 
British Empire... 48.0 49.0 472 409 39.7 


Incidentally, this attempt to win trade predominance 
serves as an additional impetus towards winning that 
coveted prize, the position of Inspector General of the 
Chinese Maritime Customs. Although China did not 
promise that whatever nation gains trade predominance 
wins the office in question, it is nevertheless understood 
that, upon the losing of trade predominance, Great Britain 
will automatically lose the office, and once she acquires 
trade predominance,”® Japan may assert her claim to the 
office, under the “most favored nation” clause. 

In attempting, however, to attain this predominance, 
Japan has often been tempted to resort to unfair means 
(particularly in Southern Manchuria) in plain violation 
of the Open Door principle of equal opportunity of trade. 
A system of rebates was inaugurated by the South Man- 
churia Railway, of which, in the very nature of things, 
only the Japanese could avail themselves, and which be- 
cause of voluminous protests, was abolished in Septem- 
ber, 1909.7 The British-American Tobacco Company 
built a factory in Mukden and paid the production tax 
as required by Chinese law, but the Japanese Govern- 
ment Tobacco Monopoly also built a factory in New- 
chuang and failed to pay it. The retail dealers of the 
British-American Tobacco Company submitted to the 
payment of the tax, but the agents of Japanese tobacco 
refused to pay the same, not infrequently backed by 
Japanese consuls.”* In the 1914 report of the American 
Consul-General at Mukden,?* the following evidence of 
discrimination appeared: 


“The only bank in Mukden doing foreign business is 
the Yokohama Specie Bank. ...A general preference 


224 THE POLICY OF JAPAN IN CHINA 


is given to Japanese merchants and traders. Rates for 
advances on cargo expected are as follows: Japanese, 
7 percent; foreigners, 8 percent; Chinese, 10 percent. 

“In selling their products, the Japanese have been fa- 
vored by cheap home labor, government subsidies, ‘special 
railway rates, preferential customs treatment and ex- 
emption from internal taxation. .. .” 


Other evidences may be offered, but suffice it to sum- 
marize the disabilities which other foreign merchants 
have experienced in Manchuria and Shantung.** Goods 
of these merchants were delayed on various pretexts, 
while the goods of the Japanese were promptly moved. 
Special favors were accorded the Japanese by the rail- 
way under their control, “including an obscene system of 
rebates.” 7 Public utilities controlled by the Japanese 
were manipulated “to give advantages to Japanese mer- 
chants.” Spacious Japanese ships refused to ship Ameri- 
can cargoes because of competing Japanese firms, and 
lower rates or rebates were given to Japanese shippers.”® 

In this connection mention must be made of the fact 
that even during the allied military intervention in Si1- 
beria, Japan availed herself of her military position to 
achieve commercial expansion much to the chagrin and 
detriment of the allied expeditionary forces. ‘The mili- 
tary trains, supposed to be used exclusively for and by 
the joint expedition, were very largely used to transport 
Japanese merchandise into Siberia. ‘This merchandise 
was literally smuggled in with the connivance of the 
Japanese authorities. It was a common occurrence for 
trainloads of commercial wares from Japan to be sent 
from Vladivostok marked as military stores, at the time 
when the armies of the joint expeditionary forces were 
deprived of necessary supplies on account of lack of 
transportation.” 27 


Next to commercial paramountcy, Japan aims at cul- 
tural predominance in the regeneration of China. Hav- 


POLICY OF PARAMOUNT INFLUENCE 225 


ing acquired Western civilization earlier than any other 
Asiatic nation, and claiming to be the harmonizer of 
the Eastern and Western civilizations, she feels called to 
the national mission of propagating the newly har- 
monized culture in the Orient, especially in China. Here 
is Marquis Okuma’s own statement: 


“I have no doubt that Japan will propagate to China 
and other countries in the Orient whose standard of 
civilization is low, her new civilization, which is a prod- 
uct of harmonizing the Japanese and European civiliza- 
tions. Ina sense, Japan may be said to have the mission 
of harmonizing Eastern and Western civilization and of 
propagating the new civilization. Nay, I do not hesitate 
to declare that this is her mission.” ?° 


To this end, by Articles 2 and 7 of Group V of the Orig- 
inal Demands,?® she demanded the right of owning land 
in the interior of China for the use of Japanese hospitals, 
churches and schools, and also that of missionary propa- 


ganda in China, both of which were not granted however. 
wpa 
geet 


The last phase of Japan’s policy of paramount influ- 
ence is her claim to special interests in China. The 
Lansing-Ishii agreement recognizes this.®° While it is 
reasonably certain that Mr. Lansing did not recognize 
Japan’s special interests in China any more than he did 
the special interests of the United States in Canada or 
Mexico,*1 Japan’s interpretation, however, is neverthe- 
less different. It tends to favor the construction of a posi- 
tion of paramount influence. The testimony of Secre- 
tary Lansing before the Senate Committee on Foreign 
Relations furnishes evidence that Viscount Ishii attempted 
to put the construction of this influence on the term 
“special interest” during the negotiation.** 


“SENATOR Boraw. He (Ishii) said that his idea was 
that Japan had special interests in China which right 


226 THE POLICY OF JAPAN IN CHINA 


was to be recognized, and by those special interests he 
mean paramount control? ! 

“SECRETARY LANSING. Yes; and I told him I could 
not consider it. ee 

“SENATOR BRANDAGEE.*? Did he at any time intimate 
that it meant paramountcy or interest different from that 
of any other nation, other than from Japan’s propin- 
quity to China? 

“SECRETARY Lansinc. My only recollection as to that 
is that he wished to have inserted the words ‘special in- 
terests and influence’ and I objected seriously to the 
insertion of the words ‘and influence,’ and they were 
stricken out.” 


Besides Mr. Lansing’s testimony, the letter of the Rus- 
sian Ambassador at Tokio of that time again revealed 
the Japanese intention to interpret “special interest” as 
paramount influence. 


“The Japanese are manifesting more and more clearly 
a tendency to interpret the special position of Japan in 
China, inter alia, in the sense that other Powers must 
not undertake in China any political steps without pre- 
viously exchanging views with Japan on the subject— 
a condition that would to some extent establish a Japa- 
nese control over the foreign affairs of China.” *4%5 


“To my question whether he did not fear that in the 
future, misunderstandings might arise from the different 
interpretations by Japan and the United States of the 
meaning of the terms ‘special position’ and ‘special inter- 
ests’ of Japan in China, Viscount Motono replied by 
saying that—(a gap in the original). Nevertheless, I 
gain the impression from the words of the minister that 
he is conscious of the possibility of misunderstandings 
also in the future, but is of the opinion that in such a case 
Japan would have better means at her disposal for car- 
rying into effect her interpretation than the United 
States.” °° | I a 


POLICY OF PARAMOUNT INFLUENCE 227 


Again, commenting on the interpretation of the 
Lansing-Ishii agreement, a Japanese author frankly 
asserted that what Secretary Lansing conceded was the 
recognition of Japan’s paramount influence in certain 
sections of China as long as the exercise of that influ- 


ence did not conflict with the principles of the Open Door 
doctrine. 


“The understanding was concluded in flexible terms 
permitting of various interpretations. But if we may 
gauge the official sentiment at Washington through the 
press dispatches from the capital at the time the under- 
standing was consummated, the American Government 
was prepared to go a long way towards the establish- 
ment of the principle that Japan was entitled to secure 
a paramount influence in certain sections in China, as 
long as she does not encroach upon the “Open Door prin- 
eipie.”.** 


Moreover, Japan’s subsequent actions show her inten- 
tion of interpreting special interests as paramount influ- 
ence. She established civil administration in Shantung, 
where for almost three years, since her capture of Tsing- 
tau, she had been contented with merely maintaining 
military occupation. She also extended her civil régime 
in Manchuria. Note this testimony before the Senate 
Committee on Foreign Relations: *8 


“Moreover, Japan went ahead and acted on her in- 
terpretation. From that time she assumed a position of 
paramountcy in relation to China. She went ahead and 
began the establishment of civil government over Shan- 
tung Province. She extended her civil government 
régime in Manchuria. She began actually to acquire 
the possessions and the position of a sovereign in most 
parts of China where she had obtained a foothold by 
the method I have indicated. She went on, and she 
obtained, through that influence, a great influence at 
Peleition 7 


228 THE POLICY OF JAPAN IN CHINA 


Furthermore, in December, 1917, shortly after the 
Bolshevist coup d’état, the Japanese Government offered 
in a note to the Allied Powers and the United States, 
to intervene in Siberia, on three conditions, one of which 
was that the Allied nations and the United States should 
recognize her paramount position in China and the ex- 
isting Sino-Japanese treaties.*® In the alleged secret 
Treaty of Alliance between Japan and Germany, pur- 
porting to have been negotiated at Stockholm, in Octo- 
ber, 1918, by the German Ambassador Lucius and Mr. 
Oda, the Plenipotentiary of Japan,—which was however 
nullified by the German Revolution,—it was provided that 
while Germany was to receive Japan’s support in estab- 
lishing her paramountcy over European Russia and 
Western and Central Siberia, Japan was to be given 
assistance in establishing her paramount influence in East- 
ern Siberia and China.*° 


NOTES TO CHAPTER XIII 


1, Kawakami, Japan in World Politics, p. 129. " 

2, 3. Kawakami, Japan and World Peace, pp. 161-162. 

4, MacMurray, 1905/18; W. W. Willoughby, Foreign Rights 
and Interests in China, p. 313. 

5, 6. The Sino-Japanese Negotiations, 1915, p. 19; MacMurray, 
1915/8; Sino-Japanese Negotiations, p. 49 et seq. 

7. MacMurray, 1915/8; Sino-Japanese Negotiations, 1915, p. 
55 et seq. 

8. The Sino-Japanese Negotiations, 1915,, p. 22. 

9. Ibid., pp. 69-70. 

10. Vida supra, chapter on the Policy of Economic Ex- 
ploitation. 

11. The Sino-Japanese Negotiations, 1915, p. 22. 

12. Ibid., pp. 10-11. 

13. Millard’s Review, May 1, 1920, p. 445 et seq., the resolu- 
tion of the inter-allied technical board. 

14, 15. Millard’s Review, May 22, 1920, p. 574; this is what 
is charged in an official dispatch received by the Peking Govern- 
ment from the civil Government of Kirin: “It is an open secret 
that large numbers of bandit leaders have been invited to 
Tsingtao where they have been trained and armed for the pur- 
pose of molesting the inhabitants in the neighboring districts and 
thereby making it impossible for the Chinese to continue their 


> 


POLICY OF PARAMOUNT INFLUENCE 229 


peaceful vocations. According to most reliable reports, several 
Japanese brought with them to this province notorious robbers. 

These ringleaders and their Japanese friends have been 
distributed at various points along the Chinese Eastern Railway 
where they intend to create trouble. 

16. In a further attempt to control the railway she offered the 
Russian committee military support on several conditions, among 
which was the one that any further financial needs of the ‘Chinese 
Eastern Railway were to be the first submitted to Japan— 
Millard, Democracy and the Eastern Question, p. 307. 

17, 18. H. K. Tong, article on The Inter-Allied Watch Dog 
of the Chinese Eastern Railway, Millard’s Review, June 26, 1920, 
p. 211 et seq. 

19. Pooley, Japan’s Foreign Policy, p. 192. 

20. MacMurray, 1898/2. 

21. Hornbeck, op. cit., p. 264. 

22. Ibid., p. 265 et seq. 

23. U. S. Commerce Reports, Feb. 20, 1915, Report of Consul 
General P. S. Heintzleman, Dec. 21, 1914, quoted in Hornbeck, 
Contemporary Politics in the Far East, p. 267. 

24. Millard, Democracy and the Eastern Question, pp. 274-275. 

Poli. D. 2/5: 

26. For the manipulation of Chinese currency in Manchuria, 
see H. K. Tong, article on Driving American and European 
- Business out of Manchuria, Millard’s Review, June 29, 1918, 

p. 168; Violating the “Open Door” in Manchuria, Millard’s Re- 
view, July 20, 1918, p. 294. 

27. John Spargo, Russia as an American Problem, pp. 254-255. 

28. J. O. P. Bland, article on A Goal for Japanese Ambition, 
Asia, February, 1921, p. 147. 

29. The Sino-Japanese Negotiations, 1915, p. 22. 

30. Hearings before the Senate Committee on Foreign Rela- 
tions, Sixty-sixth Congress, First Session, Senate Document No. 
106, on the Treaty of Peace with Germany, p. 225. 

31. Vide infra, chapter on the Policy of Asiatic Monroe Doc- 
trine. 

32. Hearings, op. cit., p. 229 et seq. 

SeeuLpiC. p23. 

34, 35. Ibid., p. 230; Millard, Democracy and the Eastern 
ae Dp. 148; Letter of Russian Ambassador at Tokio, Oct. 

36. Millard, Democracy and the Eastern Question, p. 149; The 
Shantung Question, op. cit., p. 15; Krupensky’s Third Dispatch, 

ov. 1, 1917. 

37. Kawakami, Japan and World Peace, p. 161. 

38. Hearings, op. cit., p. 444, the testimony of T. F. Millard. 

39. John Spargo, op. ‘cit., Dp. 236, 

40, Ibid., pp. 253-254, 


XIV 
THE POLICY OF POLITICAL CONTROL 


As we have already seen, Japan’s whole policy turns 
to-day on two fundamental problems—the problem of the 
increasing population of Japan and the question of China. 
Out of the first the policy of economic exploitation and 
the policy of territorial expansion developed, manifesting 
partly also in the policy of paramount influence. Out of 
the second, the Chinese question, there arose her policy 
of paramount influence and that of political control which 
constitutes the theme of our present chapter and the 
“Asiatic Monroe Doctrine” which will be discussed in 
the next chapter. 

Japan’s policy of political control is largely an out- 
growth of existing conditions in China. Ever since the 
Chinese Revolution in 1911, the control of the Central 
Government has relaxed and weakened, and the provinces 
have practically become independent states. Armies are 
maintained by the various provinces, over which the Presi- 
dent has little control. As a result, the provinces can 
declare their independence, almost at will. Thus, over 
the issue of the constitutionality of the dissolution of 
the Parliament in 1917, the provinces split into North 
and South. Again, taxes are, in the main, collected by 
the provinces, which can refuse to remit quotas as requi- 
sitioned. As a consequence, the provinces fail to send 
remittances, and the Central Government is compelled to 
live on loans. As it does not enjoy the confidence of 
the people, it is forced to resort to foreign financial aid. 
In doing so, it mortgages one asset after another, thereby 
placing the country under the danger of foreclosure. 
Added to this is the corruption of some of the leading 

230 


POLICY OF POLITICAL CONTROL 231 


officials who in exchange for the rich commission they 
can gain from the loans passing through their hands, 
do not hesitate to contract foreign loans, regardless of 
future consequences. Such a combination of situations— 
civil war, foreign borrowing, and official corruption— 
cannot but give rise to the apprehension of possible bank- 
ruptcy and Western control. 

If the conditions existing in China were free from 
foreign influences, Japan would probably have been less 
anxious. As it is, the Western Powers have made China 
a happy hunting ground for gaining concessions and ex- 
ploiting natural resources. They would not hesitate, save 
for the rise of Chinese nationalism, to make the country 
a second Africa or Egypt. And yet, in face of the for- 
eign menace, China remains divided, incapable of resist- 
ing alien aggression, and headed toward the abyss of 
bankruptcy and foreign control. To the mind of Japan, 
granting the continuance of existing conditions, and pro- 
vided no new factors of salvation arise, foreign control 
is China’s well-nigh inevitable fate. As is said, “If this 
unhappy condition is permitted to continue much longer, 
the outside Powers interested in China will sooner or 
later combine their influence to establish international 
supervision over that country.” ?? 

Besides, had China been located far away and had she 
not been of the same racial and linguistic family, Japan 
would not have been so much impelled to action. As 
it is, China is situated at the door of Japan and is of 
the same family in race and language. Should China 
ever pass under Western control, thus losing her inde- 
pendent existence, Japan would be left all alone in the 
world—to face the increasing domination of the West. 
What is worse, Japan’s destiny and welfare are inti- 
mately related to those of China. Japan depends upon 
her for the supply of basic materials, particularly coal, 
iron and steel, for a market for her manufactured prod- 
ucts, and for mutual cooperation against the Western 


232) . THE’ POLICY (OF JAPAN IN CHINA 


domination. Should China fall, Japan would undoubt- 
edly be crippled. “With the history of European diplo- 
macy in the Near and Far East before them, the Japa- 
nese cannot but shudder at the thought of the day when 
China shall be held fast in the grip of Western Powers.” ° 

To Japan, therefore, the Chinese question is one of 
life and death, and upon its proper and successful solu- 
tion depends her future prosperity and well-being: 


“For many years to come Japan’s efforts will be con- 
centrated upon the solution of the Chinese question. 
Whether or not she is equal to the task, she must here 
make supreme efforts, for her place in world politics 
primarily lies in the molding of Asia’s destiny. She will 
be spurred to play the leading role in the disposition of 
the Chinese situation, not from any motives of empire 
building, but from the necessity of self-preservation. 
Open the map of China, and mark out the territories 
staked out by various European Powers as their spheres 
of influence. Then you will begin to realize why the 
Japanese, deep in their heart, still cherish the fear of the 
Occident.” # 


For this reason, Japan would not hesitate to take such 
measures as are necessary for her own self-preservation 
as regards China. Consequently, she endeavors to fore- 
stall Western control by Japanese control. 

Aside from existing conditions and out of fear of 
the Western control of China, there is yet another vital 
reason why Japan desires to attain political control, and 
that is the future of China and its relation to herself. 
Should China be partitioned, Japan would again be iso- 
lated, and have to face the West alone. If she should be 
controlled by the Western Powers, Japan would again 
lose the economic support and political cooperation which 
China can give her. If China should remain weak and 
divided, as she now is, Japan’s own welfare and safety 
will be jeopardized by frequent rebellions and insurrec- 


POLICY ‘OF: POLITICAL €ONTROL |. 233 


tions and possible foreign intervention. If, however, 
China should become strong, Japan has to face the alter- 
native of a strong and friendly China or a strong but 
hostile China. Frankly speaking, a strong and hostile 
China, possessing ten times the strength of Japan, is 
the last choice Japan wishes to have to make. On the 
other hand, a strong and friendly China would be diffi- 
cult to secure. Having attained her own status of inter- 
national equality at the expense of China’s defeat, and 
entertaining territorial designs on South Manchuria and 
Eastern Inner Mongolia, she is quite aware of the pos- 
sible revenge that a strong China is likely to take. Apart 
from the possibility of revenge, the rise of a strong 
China, granting it to be friendly, is bound to stand in 
the way of Japan’s territorial expansion and to over- 
shadow her strength and importance. It would prob- 
ably wrest from her the leadership of the Orient, which 
she would never willingly yield. While it must be stated 
in all fairness that there are Japanese who believe sin- 
cerely that a strong and friendly China is the best pro- 
tection Japan can have, there is an overwhelming ma- 
jority who hold to a contrary opinion. Prince Yanmagata 
once remarked: “A strong Emperor is what is needed to 
rejuvenate China, and to enable her to surpass Japan. 
Japan, therefore, does not want a strong Emperor in 
China. Still less does Japan want a successful republic 
there. Japan wants a weak and incapable China; and 
a weak China under a weak Emperor, subject to Japan’s 
influence, would be the ideal state.” °*"® It is, therefore, 
fair to infer that Japan does not wish to see a partition 
of China, nor a Western control of China, nor a strong 
China, nor a hostile China. What she desires is her own 
control of China. That is her ideal. By this means she 
can not only forestall Western control, but also safeguard 
her own future against China. With control assured, 
she can, as a matter of course, carry out at will the rest 
of her policies in China—economic exploitation, territorial 


234 THE POLICY OF JAPAN IN CHINA 


expansion, paramount influence and an Asiatic Monroe 
Doctrine. 

Much more than as a measure of self-defense against 
a rising China, Japan desires to control the former coun- 
try so as to use her as an instrument for what may be 
called world domination. Japan dreams of a day when 
she will rule the entire Orient, and be able to measure 
swords with the West, if not actually to dispute Western 
superiority and domination. While this dream is not 
entertained by all Japanese, it is nevertheless the ambi- 
tion of some of them, particularly the Jingoists. A 
Japanese Imperial Pronouncement written in the autumn 
of 1916 contains the following: ° 


“Fifty million of our race wherewith to conquer and 
possess the earth! It is indeed a glorious problem! ... 
To begin with, we now have China; China is our steed! 
Far shall we ride upon her! Even as Rome rode Latium 
to conquer Italy, and Italy to conquer the Mediterranean, 
even as Napoleon rode Italy and the Rhenish States to 
conquer Germany, and Germany to conquer Europe; 
even as England to-day rides her colonies and her so- 
called “allies” to conquer her robust rival—Germany— 
even so shall we ride China. So become our 50,000,000 
race 500,000,000 strong; so grow our paltry hundreds of 
millions of gold into billions! ... But using China as 
our steed, should our first goal be the land? India? 
or the Pacific, the sea that must be our very own, even as 
the Atlantic is now England’s? ‘The land is tempting 
and easy, but withal dangerous. . . . It must, therefore, 
be the sea; but the sea means the Western Americas and 
all the islands between and with those must soon come 
Australia, India, and then the battling for the balance of 
world-power, for the rest of North America. Once that 
iS ours, we own and control the whole—a domination 
worthy of our race!” 


It is, therefore, fair to conclude that certain Japanese, 
especially the Jingoists, entertain the dream of consoli- 


POLICY OF POLITICAL CONTROL = 235 


dating the yellow race under the banner of Dai Nippon 
and of disputing Western domination, at least in the 
Orient, through the instrumentality of a subjugated and 
enthralled China. 


With such a policy determined on, she waited for an 
opportunity for its execution. When the Powers were 
present in China, she was not able to disclose her 
desire. When, in consequence of the war, the Eu- 
ropeans retired, the opportunity came, which, as the 
Japanese said, would “not occur again for hundreds 
of years to come.” At that opportune moment the Black 
Dragon Society appeared, urging the Government to form 
a defensive alliance with China, as a means to control 
her, and to resist the post-bellum Western aggression. 
It read in part: 


“Tt is a very important matter of policy whether the 
Japanese Government, in obedience to its divine mission, 
shall solve the Chinese Question in a heroic manner by 
making China voluntarily rely upon Japan. To force 
China to such a position there is nothing else for the 
Imperial Japanese Government to do but to take advan- 
tage of the present opportunity to seize the reins of po- 
litical and financial power and to enter by all means into 
a defensive alliance. . . .” 14 


“From date of the signing of this Defensive Alliance, 
Japan and China shall work together hand in hand. 
Japan will assume the responsibility of safeguarding 
Chinese territory and maintaining the peace and order in 
China. These will relieve China of all future anxieties 
and will enable her to proceed energetically with her re- 
forms, and, with a sense of territorial security, she may 
wait for her national development and regeneration. 
Even after the present European war is over and peace 
is restored China will absolutely have nothing to fear 
in the future of having pressure brought against her by 
the foreign Powers. It is only thus that permanent 
peace can be secured in Far East.” ¥ 


236: THE POLICY OF JAPAN IN CHINA 


Among the terms set forth in the secret alliance are 
the following, which relate to the control of China. When 
read in the light of the subsequent Group V of the 
Twenty-one Demands, no impartial mind can remain un- 
convinced that they were the forerunners of these 
demands: 


“For the reorganization of the Chinese army China 
shall intrust the training and the drilling of her army to 
Japan. 

“For the unification of China’s firearms and munitions 
of war, China shall adopt firearms of Japanese pattern 
and at the same time establish arsenals (with the help 
of Japan) in different strategic points. 

“With the object of creating and maintaining a Chinese 
navy, China shall intrust the training of her navy to 
Japan. 

“With the object of reorganizing her finances and im- 
proving the methods of taxation, China shall intrust the 
work to Japan, and the latter shall elect competent finan- 
cial experts who shall act as first-class advisers to the 
Chinese Government. 

“China shall first consult with and obtain the consent 
of Japan before she can enter into an agreement with 
another Power for making loans, the leasing of territory, 
or the session of the same.” 8 


Upon the urge of this memorandum and seizing the 
opportunity offered by the World War, Japan dropped 
the mask, disclosed her designs, and presented the 
Twenty-one Demands, among which was Group V. In 
the formal demands as presented, it will be noticed that 
the secret terms as proposed by the memorandum of the 
Black Dragon Society have been carefully reduced to 
three cogent but all-inclusive demands. ‘The first article 
required that “the Chinese Central Government shall em- . 
ploy influential Japanese as advisers in political, financial 
and military affairs.”4* This would cover the control 
of the Chinese army and navy, finance and the foreign 


POLICY OF POLITICAL CONTROL = 237 


relations ; in short, the administration of the Peking Gov- 
ernment. Had this been granted, the Japanese would 
have dominated the Peking Government, and as the 
memorandum of the Black Dragon Society put it, seized 
“the reins of political and financial power.” Although 
the defense might be made that the numerous Japanese 
advisers to be employed would not necessarily be given 
executive power, the danger would nevertheless be pres- 
ent that the employment of so many of them would 
mean the domination of the Peking Government by the 
Japanese influence, and, what is worse, could easily 
serve as a prelude to her eventual seizure of the reins 
of power. 

The third article of Group V demanded the joint admin- 
istration of police, in “important places” in China, or 
the employment of numerous Japanese in the police 
departments of these places. As the police power is 
a concrete symbol of sovereignty, the grant of this de- 
mand would be tantamount to the transfer of China’s 
sovereignty to Japan. Although during the negotiation it 
was disclosed that the Japanese Government meant to 
apply the police power only to South Manchuria,’ the 
language of the demand was nevertheless so general as 
to include important places in China, irrespective of their 
location, and extending throughout the Republic, thus 
giving rise to the peril of an indefinite extension of the 
Japanese police power throughout the length and breadth 
of China. 

Article 4 of Group V demanded that “China shall pur- 
chase from Japan a fixed amount of munitions of war 
(say fifty per cent or more) of what is needed by the 
Chinese Government or that there shall be established 
in China a Sino-Japanese jointly-worked arsenal. Japa- 
nese technical experts are to be employed and Japanese 
material to be purchased.” *® It is to be observed that 
this demand corresponded closely to the original secret 
specification, as set forth by the Black Dragon Society, 


238 THE POLICY OF JAPAN IN CHINA 


of unifying China’s firearms and munitions of war ac- 
cording to the Japanese pattern and of establishing Sino- 
Japanese arsenals at different strategic points of China; 
and that its grant would have meant the Japanization 
of the Chinese army and the consequent control thereof 
by Japan. While this might shield China temporarily 
from European aggression, it would nevertheless deprive 
her of the means of defense against the encroachments 
of Japan. ‘Thus, had all these demands been granted, 
the independence of China would have become a thing 
of the past. 

Significant as these demands were, Japan had, as is 
well known, to withdraw Group V excepting the clause 
respecting Fukien, largely because of the stubborn re- 
sistance of the whole Chinese nation and of the oppo- 
sition of Great Britain and the United States. In the 
ultimatum, however, Japan reserved the right to discuss 
Group V separately in subsequent negotiations.17 Mean- 
while, the Japanese representative insisted “that the 
Chinese Government should specifically state in their 
reply to the ultimatum that Group V had been ‘postponed 
for later negotiation.’” 7% It is to be observed that this 
reservation clearly proved that Japan did not give up 
the policy of political control by detaching Group V 
from the ultimatum, but that Japan did intend either to 
bring it up for future discussion or to resort to other 
means to attain the end, which was fully borne out by 
the subsequent moves of Japan. Hence the statement 
of the Chinese Government: “. . . Since the date of the 
ultimatum, Japanese policy in China appears to be ex- 
pressing itself in terms of specific principles worked out 
in these demands in Group V ‘postponed for later nego- 
tiation.’ ” 1° 


Failing in this direct assault through diplomatic chan- 
nels, upon the change in the cabinet from Okuma to 
Terauchi, Japan modified the method of attack. She 


POLICY OF POLITICAL CONTROL = 239 


adopted the indirect method of loans and an alliance with 
the pro-Japanese clique in the Peking Government, as a 
pathway to the control of China. From 1915,—the year 
of the Twenty-one Demands,—to October 25, 1918, Japan 
loaned to China no less than a total of from 200,000,000 
yen to 391,430,000, varying in amount, of course, accord- 
_ing to the authenticity of the reported loans. According 
to the estimate of T. F. Millard,?° while Japan has loaned 
to China from January 1, 1909, to the World War only 
17,670,000 yen, and to the Hanyehping 32,000,000 yen, 
she loaned to the Chinese Government, from August, 
1914, to October 25, 1918, no less than 391,450,000 yen, 
—almost eight times as much as the pre-war loans. De- 
ducting the unconfirmed and other loans susceptible of 
doubt, a safe and conservative estimate would be from 
200,000,000 to 250,000,000 yen. 

In addition to the loans, Japan also tried to control 
the Chinese army, which was one of the primary objec- 
tives of Group V. Under the name of the War Par- 
ticipation Board, ostensibly organized for effective par- 
ticipation on the part of China in the European War, but 
in reality for strengthening the northern military party 
against the South, a new army of about 50,000 men was 
created. General Aoki and about twenty-five other gen- 
erals assisted in the organization of this force. General 
Saito of the Japanese army, a military attaché of the 
Japanese Legation in Peking, had an office in the War 
Participation Board and advised on all questions.?+ 
Japan also supplied all the money, officers and ammuni- 
tions. | 

The motive of Japan’s activities in the sale of arms 
and other military supplies was indirectly revealed as 
follows: 7? 


“In reply to my question as to the credibility of the 
rumors alleging that Japan is prepared to sell to the 
Chinese Government a considerable quantity of arms and 


240 THE POLICY OF JAPAN IN CHINA 


munitions, Viscount Motono (then Japanese minister of 
foreign affairs) confirmed them, and added that the 
Peking Government had promised not to use the arms 
against the Southerners. It was evident from the min- 
ister’s words, however, that this promise possessed only 
the value of a formal justification of this sale, infringing 
as the latter does the principle of non-intervention in the 
internal Chinese feuds, proclaimed by Japan herself... . 
It is most likely that the Japanese are aiming principally 
at obtaining the privilege of rearming the entire Chinese 
army, and making China dependent in the future on Jap- 
anese arsenals and the supply of munitions from Japan. 
The arms to be supplied are estimated at 30,000,000 yen. 
At the same time, Japan intends establishing an arsenal 
in China for the manufacturing of war materials.” *° 


Aside from the control of her army, Japan likewise 
attempted to control the currency of China. In 1918, 
her agents proposed to reform the currency by the adop- 
tion of a gold standard. The plan was to issue gold notes 
on the reserve of 80,000,000 yen of bank notes to be bor- 
rowed from Japan, which, in turn, were to be secured by 
the gold reserve in Japan. In accordance with this plan, 
China was thus to have a gold standard currency with- 
out any gold reserve of her own, but based on Japan’s 
gold reserve.** Had this scheme been adopted, her cur- 
rency would have been under the control of Japan. This 
would have especially been so should there have been 
a war between Japan and China, in which event Japan 
could cut off the support of the gold reserve and thus 
throw China into financial disorder. 


When the Great War ended and the European Powers 
were ready to return to China, Japan, perceiving the 
disapproval of the Powers as to her attempt to assume 
control of that country, once more put on her mask and 
resumed the pre-war policy of international codperation. 
Hara, having succeeded to Terauchi as Prime Minister, 


POLICY OF POLITICAL CONTROL 241 


immediately reversed the policy of irresponsible loaning 
and put an effective injunction on further loans to China 
pending the unification of the North and the South.” 

Meanwhile, at the Paris Peace Conference, the New 
International Banking Consortium came to birth; and 
that effectively neutralized the Japanese efforts to gain the 
control of China. 


NOTES TO CHAPTER XIV 


K. K. Kawakami, Japan and World Peace, p. 111. 
CEabids: np. 171. 
Ibid., p. 172. 
Kawakami, Japan in World Politics, p. 12. 
Millard, Our Eastern Question, p. 168. 
Cf. Millard, Democracy and the Eastern Question, p. 99. 
Cf. The Remarks of Adachi Kunnosuke, quoted in Stod- 
dard, The Rising Tide of the Color, p. 26. 
Uno. Gt, Millard’s Review, Aug. 9, 1919, p. 388; H. K. Tong, 
How Japan’s Policy Is Undermining Her Position in China. 

9. Military Historian and Economist, January 17, 1916, pp. 
ae quoted in Stoddard, The Rising Tide of the Color, pp. 


NOUR ON 


10. The memorandum of the Black Dragon Society, Putnam 
Vea The Fight for the Republic in China, p. 128. 

a1 ibid. p: 130. 

12. Ibid., pp. 131-132. 

To. Ibid., p. 131. 

14. The Sino-Japanese Negotiations, 1915, p. 22. 

15. Ibid., p. 10. 

1. slbid.,. p. 22. 

ive. Lbid., p. 42. 

18. The ’ Shantung Question, presented by China to the Paris 
Peace Conference, published by the Chinese National Welfare 
Society, March, 1920, er 1d: 

19. The Shantung Question, p. 13. 

20. For a full list of the loans made, or reported to have been 
made, by Japan to China from January 1, 1919, to October 25, 
Ns see Millard, Democracy and the Eastern Question, pp. 187- 


21. Millard, Democracy and the Eastern Question, p. 179. 

22. The Shantung Question, op. cit., pp. 13-14, the letter of M. 
Krupensky, Russian Ambassador at Tokio, dated Oct. 16, 1919, 
eh tS ote by the Russian Revolutionary Government, Nov. 22, 


23. For a full description of Japan’s activities during this 


\ 


242 THE POLICY OF JAPAN IN CHINA 


period see chapter on the Corruption of a Nation, Millard, 
Democracy and the Eastern Question, p. 174 et seq. 
24. Far Eastern Review, Sept., 1918, p. 382, Plans for Gold 
Currency in China. 
25. Kawakami, Japan and the World Peace, pp. 190-191. ~ 


XV 
THB WASIATIC”. MONROE, DOCTRINE 


THE policy of an “Asiatic” Monroe Doctrine is actu- 
ated by Japan’s desire to preserve the territorial integrity 
and political independence of China. She feels that she 
is a close relative of China and therefore her logical and 
natural guardian. Casting her eyes far and wide, she 
finds European dominance has planted its flags over 
Africa and carved the Dark Continent into regions of 
rule and exploitation. Coming nearer home, she finds 
that European domination has extended over the whole 
of Asia with the possible exception of China and herself. 
Even at her own doors she finds China’s independence 
already partially surrendered, with her immediate out- 
look pointing to bankruptcy and eventual foreign con- 
trol. Yet, once again casting her glance to the West, 
she sees the Latin-American Republics enjoying inde- 
pendence and territorial integrity unmolested and un- 
hampered, and that this is due to the protecting wing of 
the American Monroe Doctrine, which holds European 
aggression at arm’s length. Thus, surveying the world 
situation, Japan reaches the conclusion that the only way 
to preserve China is to follow the example of America 
and declare a doctrine similar to the Monroe Doctrine for 
Eastern Asia, if not for the whole Orient. 

In addition, Japan feels the call of a national mission. 
By the Russo-Japanese War, in which an Oriental state 
vanquished a Western Power, and a yellow people suc- 
cessfully demonstrated their skill in warfare, she unwit- 
tingly asserted the principle of racial equality. She there- 
fore feels called to champion the cause of her subjugated 
neighbors and to deliver the struggling peoples from the 

243 


244 THE POLICY OF JAPAN IN CHINA 


grip of Western domination. She consequently entertains 
the noble and exalted resolve to maintain the independ- 
ence of whatever nations in Asia that are still independ- 
ent, or that may achieve independence in the course of 
time, and to recover the lost rights of the weaker nations 
of Asia. 


“. . What we want is simply that we become inde- 
pendent of the whites or free yellows of the rampancy of 
the, whitess. 7.) 


“. . . The Asiatic Monroe Doctrine is the principle of 
Eastern Autonomy, that is, of Orientals dealing with 
Eastern questions. 


‘ 


‘, . . It is incumbent upon the Yamato race to try to 
recover for the weaker nations of the East their rights, 
which have been trampled underfoot by other powers.” *” 


Thus conceiving her mission, Japan waited for an op- 
portunity to proclaim her newly adopted Asiatic Monroe 
Doctrine. Before the Great War she dared not assert 
it, for fear of the relative insufficiency of her power when 
pitted against a combination of Western nations, With 
the coming of the great struggle, she seized the oppor- 
tunity and boldly announced her policy. In the Twenty- 
one Demands, she stipulated that “the Chinese Govern- 
ment engages not to cede or lease to a third Power any 
harbor or bay or island along the coast of China” 
(Group 4). This was finally changed to a voluntary 
pronouncement by China that “no bay, harbor, or island 
along the coast of China may be ceded or leased to 
any Power.” * ‘Thus, she successfully asserted the doc- 
trine that hereafter the coast of China would not be open 
to any further European aggression. Further, she pro- 
hibited China from employing foreign capital, or from 
granting permission to foreign states or interests to work 
mines, build railways, and construct harbor works (in- 


THE “ASIATIC” MONROE DOCTRINE 245 


cluding dock-yards) in the Province of Fukien (Group 
V, Article 6).5° Thus, once more, Japan successfully 
asserted the principle that Japan would not permit any 
alien military or naval establishment in Fukien to menace 
her own position in Formosa. 

Having thus pledged China to the observance of the 
“Asiatic” Monroe Doctrine, she again waited for a chance 
to proclaim it to the Western Powers, and if possible, 
to secure its recognition by formal international agree- 
ments. The opportunity came when Mr. Wilson sent 
a note of friendly advice in June, 1917, counseling the 
Chinese people to compose their differences and to con- 
struct a central, responsible and united government. 
Japan immediately took offense at the direct presenta- 
tion of the note without being first consulted. She 
claimed that Japan enjoyed a special position in relation 
to China and that whatever advice was to be given her 
should be given through Tokio or with her concurrence 
or approval. Just as the United States enjoys a special 
position with regard to Mexico, so Japan claimed similar 
special interest in China. Commenting on this fact, 
the Yamato of Tokio said: ““Moreover, America must be 
aware of the superior position enjoyed by America in 
Mexico. Yet while Japan has abstained from taking any 
step whatever in Mexico, in deference to America’s spe- 
cial position there, America has interfered in China’s 
domestic politics by ignoring Japan’s position there.” 7 

Taking advantage of the opportunity afforded by the 
Wilson note and emulating the example of other Powers 
in sending War Missions to the United States, the Japa- 
nese Government sent a delegation to America under 
the leadership of Viscount Ishii. Prior to the arrival 
of the Ishii mission, a confidential report reached the 
Department of State, which clearly heralded the inten- 
tion and purpose of the mission: “Japan has no ulte- 
rior motives in respect to the integrity of China; that 
she adheres to her Open Door pledges; that nothing sub- 


246 THE POLICY OF JAPAN IN CHINA 


versive of China’s integrity is contemplated ; that Japan’s 
sole object is, by means entirely pacific, to bring order 
out of chaos in China with no special privileges in view; 
that Japan understands China better than any other na- 
tion, and owing to her geographical proximity and special 
political position and interests in the Far East, she should, 
therefore, when essential, take the leading role in dealing 
with China as the United States does with the nations 
of the Western Hemisphere.” ® Thus, the ostensible pur- 
pose of the mission, as it related to China, was to seek 
recognition from the United States of a similar position 
for Japan in the Orient as she, herself, enjoyed in the 
Western Hemisphere. 

After the landing of the Japanese Mission, in August, 
1917, and while the negotiation was in session, Viscount 
Ishii openly announced the Asiatic Monroe Doctrine in 
a speech delivered in New York, September 29, 1917, and 
again amplified it in another speech made in the same 
city, October 1, 1917, which constituted the first official 
pronouncement of the Japanese “‘Asiatic” Monroe Doc- 
trine. We quote extracts from his addresses: 


“We wish to be, and to always continue to be, the 
sincere friend and helper of our neighbor, for we are 
more interested than any one else except China in good 
government there, and we must at all times for self- 
protection prevent other nations from doing what we have 
no right to do. Not only will we not seek to assail the 
integrity or the sovereignty of China, but we will eventu- 
ally be prepared to depend and maintain the same in- 
tegrity and independence of China against any aggressor. 
For we know that our own landmarks would be threat- 
ened by any outside invasion or interference in China.” ® 


“In a speech delivered on Saturday night I made par- 
ticular reference to the policy of Japan with regard to 
China. This reference took the form of a repetition of 
the pledge and promise that Japan would not violate the 
political independence or territorial integrity of China; 


“|. 


THE “ASIATIC”? MONROE DOCTRINE 247 


would at all times regard the high principle of Open 
Door and equal opportunity. Now I find that this utter- 
ance of mine is taken as the enunciation of a ‘Monroe 
Doctrine in Asia.’ I want to make it very clear to you 
that the application of the term ‘Monroe Doctrine’ to 
this policy and principle, voluntarily outlined and pledged 
by me, is inaccurate.” 


“There is this fundamental difference between the 
‘Monroe Doctrine’ of the United States as to Central 
and South America and the enunciation of Japan’s atti- 
tude toward China. In the first place, there is on the 
part of the United States no engagement or promise, 
while in the other Japan voluntarily announces that Japan 
will herself engage not to violate the political or terri- 
torial integrity of her neighbor, and to observe the prin- 
ciple of the Open Door and equal opportunity, asking 
at the same time other nations to respect these princi- 
mice... 5° 


Thus, Viscount Ishii, as official spokesman of Japan, 
announced, in essence, that his country would respect the 
territorial integrity and political independence of China 
and would eventually be prepared to defend the same. 
He also pointed out the difference between the American 
Monroe Doctrine and Japan’s doctrine in that the United 
States did not pledge abstention or protection, while 
Japan voluntarily engaged not to violate the sovereignty 
and integrity of China, while, at the same time, asking 
the other Powers to do likewise. While Ishii did not 
definitely brand the doctrine as “Asiatic” Monroe Doc- 
trine, the principles he enunciated were such as to con- 
stitute a real “Asiatic”? Monroe Doctrine—that is, Japan 
undertook not to violate the sovereignty and integrity of 
China, nor permit other nations to do so. 


Mr. Lansing’s statements further substantiate what 
Viscount Ishii proclaimed and declared it to be nothing 


248 THE POLICY OF JAPAN IN CHINA 


less than the principles of an Asiatic Monroe Doctrine. 
In his statement to the press, he declared that the agree- 
ment introduced a new principle—that is, the principle 
of non-intervention, which is the cardinal principle of 
the American Monroe Doctrine. In his statement to 
the Chinese Government, Mr. Lansing reiterated the sig- 
nificance of the introduction and recognition of the 
principle of non-interference.*? His testimony before 
the Senate Committee on Foreign Relations further 
strengthened the belief that the special interests of Japan 
which he recognized in China were not different from 
the special interests of the United States in Canada or 
Mexico. In other words, he recognized Japan’s claim 
to an Asiatic Monroe Doctrine, if it were based on the 
same principle: 


“SENATOR Boraw. In view of the twenty-one de- 
mands, what construction did you place upon the ques- 
tion of Japan’s special interest in China? 

“SECRETARY LANSING. Only the special interest that 
comes from being contiguous to another country whose 
peace and prosperity were involved. 

“SENATOR BoraH. No different special interest from 
that which we have in Canada? 

“SECRETARY Lansinc.~- No. 

“SENATOR Boraw. Or which we have in Mexico? 

“SECRETARY LANSING. Exactly.” 1% 


Lansing also testified that Viscount Ishii, in insist- 
ing on the inclusion of a recognition of Japan’s special 
interests, did mention that there should be a Monroe 
Doctrine for the Far East, in response to which Mr. 
Lansing explained that what special interests the United 
States had in the Latin-American Republics was not 
paramount influence, nor exclusive nor special privi- 
leges, but rather the preservation to these Republics of 
the power of self-development and immunity from out- 
side interference: 


THE “ASIATIC” MONROE DOCTRINE 249 


“At another interview we discussed the phrase ‘special 
interest,’ which the Japanese Government had been very 
insistent upon, and which, with the explanation I have 
made, I was not very strongly opposed to, thinking that 
the reaffirmation of the Open Door policy was the most 
essential thing that we could have at this time; and 
we discussed the phrase which appeared in the draft note 
‘special interest,’ and I told him then that if it meant 
‘paramount interest,’ I could not discuss it further; but 
if he meant special interest based upon geographical po- 
sition, | would consider the insertion of it in the note. 
Then it was, during that same interview, that we men- 
tioned ‘paramount interest’ and he made a reference to 
the Monroe Doctrine, and rather a suggestion that there 
should be a Monroe Doctrine for the Far East. 

“And I told him that there seemed to be misconcep- 
tion as to the underlying principle of Monroe Doctrine, 
that it was not an assertion of primacy or paramount 
interest by the United States in its relation to the Ameri- 
can republics; that its purpose was to prevent foreign 
Powers from interfereing with the separate rights of 
any nation in this hemisphere, and that the whole aim 
was to preserve to each republic the power of self- 
development. I said further that so far as aiding in this 
development the United States claimed no special privi- 
leges over other countries.” * 


It is, therefore, clear that the special interests which 
Lansing recognized as Japan’s in China, are no more 
than, and not different from, the special interests of 
the United States in the other American republics. It 
is also plain that the essential principle that he empha- 
sized in the understanding was the principle of non- 
interference, with the territorial integrity and political 
independence of China, either by Japan or other Powers— 
the same cardinal principle which governs the American 
Monroe Doctrine. It is consequently not unsafe to con- 
clude that in recognizing Japan’s special interests in 
China, due to the geographical proximity, Secretary 


250 THE POLICY OF JAPAN IN CHINA 


Lansing inadvertently extended his recognition to Japan’s 
“Asiatic” Monroe Doctrine. 


Let us now compare and contrast Japan’s “Asiatic” 
Monroe Doctrine with the American Monroe Doctrine 
and try to discover the similarities and differences of 
the two policies. With respect to similarities, both are 
based on the principle of self-preservation. Just as the 
United States would not permit further extension of the 
European system in the Western hemisphere, for fear 
that such an occurrence would endanger her own peace 
and safety,> so Japan would not permit any further 
European aggression in China and Eastern Asia lest it 
should menace her own tranquillity and well-being. 
Again, both doctrines are founded on the fundamental 
principle of non-interference. While permitting the usual 
intercourse based on international law and even war for 
redress of wrong, collection of debts, vindication of jus- 
tice, so long as such acts do not affect territorial integrity 
and political independence, the United States would not 
allow other non-American states to interfere with the 
territorial integrity of sister American Republics, by con- 
quest, or colonization or extension of boundaries, or 
transfer by purchase; nor would she allow any non- 
American interference with the political independence 
thereof by destruction of existing governments, or estab- 
lishment of new governments, or control of government 
through political and financial concessions. Likewise, 
Japan would, while permitting usual commercial and po- 
litical intercourse, put a similar injunction, as far as pos- 
sible, on any further European aggression in China and 
Eastern Asia that would interfere with the territorial 
integrity and political independence of the same. 

With respect to differences, however, there are two 
fundamental distinctions. In the first place, the Ameri- 
can Monroe Doctrine carried a corollary of non-inter- 
ference in the affairs of purely European or Asiatic 


THE “ASIATIC” MONROE DOCTRINE 251 


concern. Hence the policy of no entangling alliances. 
In other words, as the United States would not permit 
non-American states to interfere with affairs of purely 
American concern, so the United States reciprocates the 
measure by abstaining from affairs of purely European 
or Asiatic concern. Thus the American Monroe Doc- 
trine is founded on the principle of the Golden Rule. 
This, however, does not place an absolute bar on the 
United States with reference to intervention in affairs of 
Europe or Asia. If her own interests should be involved 
or the cause of humanity at stake, she would not hesitate 
to intervene—a right sanctioned in international law. 

But the “Asiatic” Monroe Doctrine carries no such 
corollary; at least it does not up to the present moment. 
Japan did not abstain from affairs of European concern. 
Instead of avoiding entangling alliances, she entered into 
an alliance with Great Britain, and another with Russia 
in 1916. Instead of standing aloof from affairs of 
European concern, she participated in the World War, 
not as a disinterested belligerent but as an active ally of 
Great Britain, ousting Germany from Shantung and 
guarding the transportation routes between Great Britain 
and India and Australia. Once more, she concluded 
agreements with Russia in 1907 and 1910, allowing 
Russia to perpetrate in Outer Mongolia and North Man- 
churia what she herself intended to do in Eastern Inner 
Mongolia and South Manchuria. 

In the second place, the American Monroe Doctrine 
prohibiting non-American states from interference in 
the Western hemisphere applies the similar injunction on 
herself with equal force. That is to say, in preaching 
to other nations the doctrine of non-interference she prac- 
tices the doctrine herself and thus sets the example. 
Further, she does not claim any primacy or paramount 
interest or special privileges. This restriction upon her- 
self, however, does not preclude the possibility of inter- 
vention, when her own interests are involved, or when 


202: THE! POLICY ‘OF JAPAN AN CHINA 


the Monroe Doctrine is jeopardized. Thus, she tempo- 
rarily took over the Governments of Haiti and San 
Domingo, not to extinguish the political independence of 
these states, but rather to preserve the same, and thus 
to safeguard the sanctity of the Monroe Doctrine. 

But Japan did not place the same restriction upon her- 
self. Instead of observing the doctrine, she assaulted 
the sovereignty of China by the presentation of Group V 
of the Twenty-one Demands. Instead of protecting the 
territorial integrity of China, as Ishii pledged, she enter- 
tained territorial designs upon South Manchuria and 
Eastern Inner Mongolia, and attempted to acquire the 
sovereignty thereof by the demand for police power. 
Instead of preserving the Open Door in China for the 
trade of the world, she resorted to unfair means to attain 
commercial predominance, to the exclusion and therefore 
detriment of the merchants of other foreign states. Thus, 
she did not abstain from interference with the sovereignty 
and integrity of China, which she asks the other powers 
to do. In short, she did not practice what she preached, 
thus failing to set the necessary example. 

The conclusion can, therefore, be reached that Japan’s 
“Asiatic” Monroe Doctrine is like the American in that 
it is based on the principles of self-preservation and 
non-interference, but unlike the American in that its 
promoter did not reciprocate its spirit by refraining from 
interference in affairs of European concern, nor set the 
example of applying the same restriction on herself. 


NOTES TO CHAPTER XV 


1, 2. Japan’s Mighty Mission, by Honorable Mr. Iichiro 
Tokutomi, the chief editor and proprietor of the Kokumin 
Shimbin, Crown Member of the House of Peers of Japan, 
Peking Post, February 10, 1917, Japan Chronicle, January 19, 
1917, quoted in T. Das, Is Japan a Menace to Asia?, Appendix, 
p. 121 et seq. 

3. The Sino-Japanese Negotiations, 1915, p. 21; China Year 
Book, 1919, p. 567, 


THE “ASIATIC” MONROE DOCTRINE 253 


4. The Sino-Japanese Negotiations, 1915, p. 28. 
ent oy Ibid., p. 22; pp. 69-70; the China ver Book, 1919, pp. 

3 

s Millard, Democracy and Eastern Question, p. 119. 

J. W. Jenks, Japan in Action, North American Review, 
hag 1919, pp. 318-319. 

9. The Imperial Japanese Mission to the United States, 1917, 
Carnegie Endowment for International Peace; Current History, 
Vol. 7, 1917-18, p. 356; New York Times, Sept. 30, 1917. 

10. The Imperial Japanese Mission to the United States, 1917, 
Carnegie Endowment, pp. 103-104; Current History, Vol. VII, 
1917-18, p. 357; New York Times, ‘October 2, 1917. 

11. Hearings on the Treaty of Peace with Germany signed 
at Versailles on June 28, 1919, before the Senate Committee on 
Foreign Relations, Sixty-sixth Congress, First Session, Senate 
Document No. 106, p. 226. 

12. Millard, Democracy and the Eastern Question, pp. 162-163, 
Paul S. Reinsh’s Letter to the Chinese Government, Nov. 8, 1917. 

13. Hearings, ibid., p. 147. 

14. Hearings, ibid., pp. 223-224. 

15. Message of James Monroe, Dec. 2, 1823, American Foreign 
Policy, Carnegie Endowment for International Peace, the Di- 
vision of Intercourse and Education, Publication No. 17, pp. 5-6. 


XVI 


THE TWENTY-ONE DEMANDS AS AN EXPO- 
NENT OF JAPAN’S POLICIES IN CHINA 


So far we have considered the five policies of Japan 
in China—economic exploitation, territorial expansion, 
paramount influence, political control and the Asiatic 
Monroe Doctrine. We shall now examine an historic 
document which bears all the earmarks of these five 
policies and which has since become the best exponent 
thereof; I mean the original Twenty-one Demands. 

This document was produced under conditions of world 
politics which rendered it the fullest and clearest revela- 
tion of Japan’s intentions and desires in regard to China. 
It was presented to the Chinese Government, as we all 
know, on January 18, 1915, when the World War was 
raging in Europe. In consequence of the war, the great 
Powers receded from the international rivalry in China 
and plunged into a life-and-death grapple on the battle- 
fields of Europe, with practically no energy left for 
further aggressions or exploitation in China. The only 
great neutral Power as yet not involved was the United 
States, but she was none the less absorbed in the prog- 
ress of the European War and had little attention to give 
to affairs of the Far East. It was this crisis in the 
world situation, when the tide of European aggression 
had just ebbed, and when the United States had just 
relaxed in her resolution to enforce her Open Door doc- 
trine in China, that Japan took advantage of. 

When the Powers were present, or free from wars 
among themselves, Japan dared not disclose her designs 
as to China, for fear she might meet the united opposi- 
tion of the Powers; and so she had to wear the mask 

254 


THE TWENTY-ONE DEMANDS 255 


and fall in line with the Powers in their common policy 
of international codperation, and be contented with her 
spheres of influence, limited as they might be. But 
when the World War came she took advantage of the 
unusual opportunity, or such an opportunity would “not 
occur for hundreds of years to come.”+ Casting aside all 
ordinary restraints, and counting upon success in her 
measure, in a mad rush to solve the Chinese Question 
at this juncture, she unpremeditatedly discarded her 
mask and exposed her full intentions and designs re- 
garding China, as we shall see in the original Twenty- 
one Demands. 


Further, the original Twenty-one Demands represented 
the common attitude of the majority of the Japanese 
in regard to China. While there were some who had 
the moral courage and conviction to denounce them, the 
demands were nevertheless, on the whole, well supported 
by the greater part of the electorate. When the nego- 
tiations rspecting the Twenty-one Demands were in ses- 
sion, Count Okuma dissolved the Diet on an issue of 
army increase, and appealed to the people for a new 
House of Representatives that would support him.? In 
his campaign, he purposely avoided the issue of army in- 
crease, but founded his plea for support on the value 
and importance of his China policy. The returns gave 
him an overwhelming victory. Supporting the Govern- 
ment were the Doshi-kai with 150 votes, the Chusai-kai 
with 36 and the Independents with 62 most of whom 
were favorable to the Government. Opposing the Gov- 
ernment were the Seiyu-kai with 106 votes and the Koku- 
minto with 27, thus giving the Government a clear ma- 
jority of about fifty. And when the special session con- 
vened on May 27, 1915, while it was too late to pass 
upon the China policy, as the negotiations respecting the 
Twenty-one Demands had already been concluded by the 
Treaties of May 25, 1915, the House nevertheless passed 


256 THE POLICY OF JAPAN IN CHINA 


the budget estimate for increasing the appropriations for 
army and navy.? Thus, the policy upon which Count 
Okuma had insisted in December of strengthening the 
armed forces of the country “in order that our diplo- 
matic dealings may become more effective” received the 
legislative sanction,* or in other words, Count Okuma’s 
China policy as represented by the Twenty-one Demands, 
or in short, the Twenty-one Demands themselves, re- 
ceived the support of the majority of the Japanese elec- 
torate. It can, therefore, be said that the Twenty-one 
Demands represented the common attitude of the Japa- 
nese people regarding China, excepting possibly a small 
minority.® 

Besides, when the failure to impose on China Group V 
of the Twenty-one Demands had subsequently exposed 
Japan to the bitter antagonism and hatred of the Chinese 
and the censure of the Powers, the criticism of the 
Japanese was directed upon the way in which the de- 
mands were presented and negotiations handled, rather 
than upon intrinsic right or wrong of the demands them- 
selves. It can be said that the majority of the Japanese, 
even after the failure of Group V, still believed that 
the Twenty-one Demands were right and necessary from 
the point of view of the welfare of Japan, and what 
criticism they offered was therefore aimed at the means 
by which the ends were to be attained, rather than the 
ends themselves. As a fair illustration, let us note the 
statement: “Not that these demands were in principle 
wrong and unjustifiable, but because they were pressed 
upon China in utter disregard of the susceptibilities of 
the nation whose friendship she had been professing to 
value.’® And this attitude, as we have noticed, was 
reflected in the policy of Count Terauchi, who, succeed- 
ing Count Okuma, changed the tactics from a direct 
and open attack through diplomatic channels to a covert 
and indirect assault through loans, arms deal, and alli- 
ance with pro-Japanese officials in Peking. 


THE TWENTY-ONE DEMANDS Boh 


When we submit the original Twenty-one Demands to 
a close scrutiny, we find that the division into five groups 
was done in rough correspondence with the five policies 
of Japan. Whether the Japanese statesmen who drafted 
them originally did so consciously or unconsciously, we 
cannot tell, but whatever may be the original purpose of 
the division, the fact remains nevertheless significant that 
the fivefold division should coincide roughly with Japan’s 
fivefold policy, as we shall see. 

The first group relating to Shantung, which extends 
Japanese influence into that Province, represents the pol- 
icy of paramount influence. The second group regarding 
South Manchuria and Eastern Inner Mongolia exempli- 
fies the policy of territorial expansion. The third group 
as to the Hanyehping Company symbolizes the policy of 
economic exploitation. The fourth group dealing with 
the non-alienation of China’s coast represents the “Asi- 
atic Monroe Doctrine.” The fifth group represents the 
policy of political control. 

If, however, we should group the demands according 
to the five policies, then the conclusion is all the more 
evident that they embody all the five policies of Japan 
and therefore constitute the best exponent thereof.’ 


THE Poticy or Economic EXPLOITATION 


GROUP II 


Article 4: The Chinese Government agrees to grant 
Japanese subjects the right of opening the mines in South 
Manchuria and Eastern Inner Mongolia. As regards 
what mines are to be opened, they shall be decided upon 
jointly. 


GROUP III 


Article 1: The two Contracting Parties mutually agree 
that when the opportune moment arises the Hanyehping 
Company shall be made a joint concern of the two na- 


258 THE POLICY OF JAPAN IN CHINA 


tions, and they further agree that without the previous 
consent of Japan, China shall not by her own act dispose 
of the rights and property of whatsoever nature of the 
said company nor cause the said company to dispose 
freely of the same. 

Article 2: The Chinese Government agrees that all 
mines in the neighborhood of those owned by the Hanyeh- 
ping Company shall not be permitted, without the con- 
sent of the said company, to be worked by other persons 
outside of the said company; and further agrees that if 
it is desired to carry out any understanding which, it is 
apprehended, may directly or indirectly affect the inter- 
ests of the said company, the consent of the said company 
shall first be obtained. 


Tue Poxticy oF TERRITORIAL EXPANSION 


GROUP II 


Article 2: Japanese subjects in South Manchuria and 
Eastern Inner Mongolia shall have the right to lease or 
own land required either for erecting suitable buildings 
for trade and manufacture or for farming. 

Article 3: Japanese subjects shall be free to reside and 
trade in South Manchuria and Eastern Inner Mongolia 
and to engage in business and in manufacture of any kind 
whatsoever. 


GROUP V 


Article 3: Inasmuch as the Japanese Government and 
the Chinese Government have had many cases of dispute 
between Japanese and Chinese police to settle cases which 
caused no little misunderstanding, it is for this reason 
necessary that the police departments of important places 
(in China) shall be jointly administered by Japanese and 
Chinese or that the police departments of these places 
shall employ numerous Japanese, so that they may at the 
same time help to plan for improvement of the Chinese 
Police Service. 


THE TWENTY-ONE DEMANDS 259 


THE Poticy oF PARAMOUNT INFLUENCE 


GROUP I 


Article I: The Chinese Government engages to give 
full assent to all matters upon which the Japanese Gov- 
ernment may hereafter agree with the German Govern- 
ment relating to the disposition of all rights, interests 
and concessions, which Germany, by virtue of treaty or 
otherwise, possesses in relation to the Province of Shan- 
tung. 

Article 2: The Chinese Government engages that 
within the Province of Shantung and along its coast no 
territory or island will be ceded or leased to a third party 
under any pretext. 

Article 3: The Chinese Government consents to 
Japan’s building a railway from Chefoo or Lungkow to 
join the Kiaochow-Tsinanfu Railway. 

Article 4: The Chinese Government engages in the 
interest of trade and for the residence of foreigners, to 
open by herself as soon as possible certain important 
cities and towns in the Province of Shantung as Commer- 
cial Ports. What places shall be opened are to be jointly 
decided upon in a separate agreement. 


GROUP II 


Article 1: The two Contracting Parties mutually agree 
that the term of lease of Port Arthur and Dalny and the 
term of lease of the South Manchuria Railway and the 
Antung-Mukden Railway shall be extended to the period 
Or.99 years. 

Article 5: The Chinese Government agrees that in re- 
spect of the (two) cases mentioned herein below the 
Japanese Government’s consent shall be first obtained 
before action is taken :— 

(a) Whenever permission is granted to the subject of 

a third Power to build a railway or to make a loan 
with a third Power for the purpose of building 


260 THE POLICY OF JAPAN IN CHINA 


a railway in South Manchuria and Eastern Inner 
Mongolia. 

(b) Whenever a loan is to be made with a third Power 
pledging the local taxes of South Manchuria and 
Eastern Inner Mongolia as security. 

Article 6: The Chinese Government agrees that if 
the Chinese Government employs political, financial or 
military advisers or instructors in South Manchuria and 
Eastern Inner Mongolia, the Japanese Government shall 
first be consulted. 

Article 7: The Chinese Government agrees that the 
control and management of the Kirin-Changchun Railway 
shall be handed over to the Japanese Government for a 
term of 99 years, dating from the signing of this agree- 
ment. 


GROUP V 


Article 5: China agrees to grant to Japan the right 
of constructing a railway connecting Wuchang with Kiu- 
kiang and Nanchang, another line between Nanchang and 
Hangchow, and another between Nanchang and Chao- 
chow. 

Article 6: If China needs foreign capital to work 
mines, build railways and construct harbor works (in- 
cluding dock-yards) in the Province of Fukien, Japan 
shall be first consulted. 

Article 2: Japanese hospitals, churches and schools 
in the interior of China shall be granted the right of own- 
ing land. 

Article 7: China agrees that Japanese subjects shall 
have the right of missionary propaganda in China. 


THe Poticy oF PoLirIcAL CONTROL 


GROUP V 


Article 1: The Chinese Central Government shall em- 
ploy influential Japanese as advisers in political, financial 
and military affairs. 


THE TWENTY-ONE DEMANDS 261 


Article 3: Inasmuch as the Japanese Government and 
the. Chinese Government have had many cases of dis- 
pute between Japanese and Chinese police to settle cases 
which caused no little misunderstanding, it is for this 
reason necessary that the police departments of impor- 
tant places (in China) shall be jointly administered by 
Japanese and Chinese or that the police departments of 
these places shall employ numerous Japanese, so that 
they may at the same time help to plan for the improve- 
ment of the Chinese Police Service. 

Article 4: China shall purchase from Japan a fixed 
amount of munitions of war (say 50 per cent or more) 
of what is needed by the Chinese Government or that 
there shall be established in China a Chino-Japanese 
jointly worked arsenal. Japanese technical experts are 
to be employed and Japanese material to be purchased. 


Tue Poricy or Astatic MonroE DOCTRINE 


GROUP IV 


The Chinese Government engages not to cede or lease 
to a third Power any harbor or bay or island along the 
coast of China. 


It may, therefore, be said that the original Twenty- 
one Demands constitute to-day the best one-piece historic 
document that embodies all the five policies of Japan in 
China. Produced as they were under the favorable 
opportunity of the World War, supported as they were 
by the majority of the Japanese electorate, revealing as 
they did in the clearest and fullest manner the intentions 
and desires of the Japanese people regarding China at 
that time, and divided as they were into five groups in 
rough correspondence with the five policies of Japan, we 
can hence reaffirm our conclusion that they constitute 
to-day the best exponent of Japan’s policies in China. 


262 THE POLICY OF JAPAN TN: CHINA 


NOTES TO CHAPTER XVI 


Putnam Weale, The Fight for the Republic in China, p. 128. 
Hornbeck, Contemporary Politics in the Far East, p. 176. 
Hornbeck, Contemporary Politics in the Far East, pp. 176- 


Ibid., p. 179. 
Ibid., p. 179. For instance, Prof. K. Hayashi of Keio Uni- 
versity, and a member of the Diet, tendered his resignation to 
his party and registered his protest: ‘““Why were such abominable 
demands in the first place framed by the Cabinet? . . . It is 
absolutely an insult to our neghbor’s sovereignty. Those desires, 
if accepted, were, that China would consent to be a protectorate 
of Japan.” 

6. Kawakami, Japan in World Politics, p. 168; Japan and 
World Peace, p. 167 

7. The Original Twenty-one Demands can be found in the 
Chino-Japanese Negotiations, 1915, pp. 19-22. 


17 


nbs goog he 


XVII 
THE WISDOM OF JAPAN’S POLICY IN CHINA 


It is but fitting and proper that we should conclude 
this Part with a discussion of the wisdom of Japan’s 
policy in China. As the shortest road to convince people 
is to appeal to their self-interest, we propose to treat 
the subject from the point of view of the welfare and 
destiny of Japan, rather than from the point of view of 
China’s interests, or those of the Far East, or of the 
world. 

As we recall, Japan’s policies in China turn on two 
fundamental problems, the population problem of Japan 
- herself and the Chinese question. As we have also seen, 
the population problem of Japan results in the adoption 
of two policies towards China—those of economic ex- 
ploitation and territorial expansion. Regarding the policy 
of economic exploitation, we have no quarrel with Japan. 
In fact, we entertain for her the highest good-will and 
the expectation that she may succeed in converting her- 
self from an agricultural to an industrial and commercial 
nation. Particularly with reference to Japan’s needs 
for iron, coal and steel, we sympathize with our neigh- 
bor and are quite willing to extend our cooperation. 
What we desire in this matter is that Japan should try 
to reach her ends in fair and legitimate ways. As long 
as she does so, we have absolutely no grievances, but 
on the contrary, we wish our neighbor unprecedented 
success. 

What we do oppose is Japan’s policy of territorial ex- 
pansion in South Manchuria and Eastern Inner Mon- 
golia which form integral parts of China. She claims 
that inasmuch as she has preserved the integrity of 

263 


264 THE POLICY OF JAPAN IN CHINA 


Manchuria by her sacrifice in the Russo-Japanese War, 
she is entitled to the territory.1_ But she should recall 
that she fought the war, not primarily for the preserva- 
tion of Manchuria, but rather for self-preservation. The 
indirect effect happened to be the preservation of Man- 
churia, but that does not entitle her to the ownership 
and sovereignty of South Manchuria and Eastern Inner 
Mongolia. The best she can ask is that she should be 
compensated for her sacrifice in forms of economic con- 
cessions in these regions, and these China has already 
granted. To claim that inasmuch as she has preserved 
South Manchuria in a war of self-defense she is therefore 
entitled to the territory, is to claim more than justice 
and equity would allow her. 

Further, these regions, while not yet thickly popu- 
lated, are nevertheless quite well peopled by about 
20,000,000 Chinese.? For Japan to expand her territorial 
limits so as to include this territory is to bring under 
her jurisdiction regions already well occupied by the 
Chinese. Hence any attempt on the part of Japan to 
annex these lands will meet the hostile opposition of 
the people therein and the Chinese residing in China 
proper. For Japan to cut these integral parts of China 
from the body of the Chinese nation will create a con- 
dition of Chinese irridenta, which will set up eternal 
walls of hatred between the two peoples. Besides, even 
though she might be able to absorb these regions, Japan 
would be confronted with the alternatives of being ousted 
by the united resistance of the Chinese in these regions 
and in China proper, or of subjugating the Chinese in 
China proper. As Japan is bound to attempt the subju- 
gation of the Chinese in China proper as a measure of 
self-defense, the annexation of South Manchuria and 
Eastern Inner Mongolia will inevitably lead to eventual 
struggle between the Chinese and the Japanese. Unless, 
therefore, the Japanese are prepared to go the length of 
fighting the Chinese people and making them eternal 


WISDOM OF JAPAN’S POLICY IN CHINA 265 


enemies, her policy of territorial expansion in South 
Manchuria and Eastern Inner Mongolia is fraught with 
serious perils. 

Furthermore, just as Japan needs an outlet for her 
surplus population, so China needs an outlet for her own. 
If Japan’s increasing population needs Manchuria for 
an outlet, China’s 400,000,000 will likewise increase and 
need the same relief. If Japan’s claim to Manchuria, 
as based on the need of an outlet for surplus popula- 
tion, be valid, then China’s claim to the same territory, 
in addition to her recognized ownership and occupation 
thereof, is ten times better than that of Japan. Sup- 
porting this claim of China, it is well said by an impartial 
observer: ® 


“Told, as we have been over and over, that Japan 
must have an outlet for her excess of population and 
that Manchuria is the natural outlet, it is well to bear 
in mind that China also has a crowded population and 
that in the new condition in which the awakening Chinese 
people find themselves a movement toward the relief of 
the present congested conditions is bound to manifest 
itself in an attempt at redistribution. This will mean 
pressure outward. Manchuria is a natural outlet for 
the excess of China’s population more truly than that 
of Japan; and, as far as rights to this open field are con- 
cerned, China has the better claim. The pressure of ex- 
cess population seeking an emigration outlet will prob- 
ably be greater from China than from Japan—for there 
are 400,000,000 Chinese as compared with 70,000,000 
Japanese and Koreans, and the former are also no less 
adept at ‘replenishing the earth’ than are the latter. 

To enter Manchuria the Chinese have but to step 
through the breach in the great wall at Shanhaikwan or 
to sail across the ninety miles of water between the Shan- 
tung Peninsula and the Liaotung Peninsula. As many 
Chinese farmhands come and go between Chili and Shan- 
tung Provinces and Manchuria each year as there are 
Japanese in South Manchuria after ten years of occupa- 
tion. What people, then, would it seem, have the best 


266 THE POLICY OF JAPAN IN CHINA 


natural right to Manchuria; and what people, if events 
are left to their natural course, will settle this great poten- 
tial outlet for excess population?” 


Moreover, Japan does not need other land, and: espe- 
cially land well occupied by the Chinese, for purposes 
of finding an outlet for her surplus population. Japan 
has unused land within her own confines sufficient to 
support the growing population of Japan for the next 
half century. According to the estimates of Professor 
F. H. King, Japan has now about 15,400 square miles of 
cultivable land unused and with that, when used, she can 
support a total population of from one hundred to one 
hundred and fifty million, whereas the population num- 
bered on December 31, 1918, only 57,070.936.°4 Pro- 
fessor King’s testimony follows: + 


“The Island Empire of Japan stretches Bion the Asi- 
atic Coast through more than twenty-nine degrees of 
latitude from the southern extremity of Formosa north- 
ward to the middle of Saghalien, some 2,300 statute 
miles; or from the latitude of middle Cuba to that of 
north Newfoundland and Winnipeg; but the total land 
area is only 175,428 square miles and less than that of 
the three states of Wisconsin, lowa and Minnesota. Of 
this total land area only 23,698 square miles are at pres- 
ent cultivated; 7,151 square miles in the three mainlands 
are weed and pasture lands. Less than fourteen per cent 
of the entire land area is at present under cultivation. 

“Tf all lands having a slope of less than fifteen degrees 
may be tilled, there yet remain in the four main islands 
15,400 square miles to bring under cultivation, which is 
an addition of 65.4 per cent to the land already cultivated. 


“The lands yet to be reclaimed are being put under 
cultivation rapidly, the amount improved in 1907 being 
64,448 acres. If the new lands to be reclaimed can be 
made as productive as those now in use, there should be 
opportunity for an increase in population to the extent 
of about 35,000,000 without changing the present ratio 
of 3.4 people to the acre of cultivated land. 


WISDOM OF JAPAN’S POLICY IN CHINA 267 


“While the remaining lands to be reclaimed are not as 
inherently productive as those now in use, improvements 
In management will more than compensate for this, and 
the empire is certain to quite double its present main- 
tenance capacity and provide for at least a hundred mil- 
lion people with many more comforts of home and more 
satisfaction for the common people than they now enjoy. 

“Since 18/2 there has been an increase in the popula- 
tion of Japan amounting to an annual average of about 
1.1 per cent, and if this rate is maintained the one hundred 
million mark would be passed in less than sixty years. 
It appears probable, however, that the increased acreage 
put under cultivation and pasturage combined will more 
than keep pace with the population up to their limit, while 
the improvements in methods and crops will readily per- 
mit a second like increment to her population, bringing 
that for the present empire up to one hundred and fifty 
million. Against this view, perhaps, is the fact that the 
rice crop of the twenty years ending in 1906 is only thirty- 
three per cent greater than the crop of 1838.” 


Thus, the testimony of Professor King clearly shows 
that Japan has enough land available for cultivation not 
yet used which can yield support to at least twice as many 
people for the next half century. Besides, Japan holds 
Formosa, Korea and South Saghalien, which offer a 
further opportunity for an expansion of. population of 
from 20,000,000 to 25,000,000.° 

More than this, Japan has so far failed to prove her 
capacity as a colonizing race. Despite her occupation 
of Formosa since 1895, and her efforts to stimulate 
emigration thereto, through subsidies and financial assist- 
ances of all sorts, only 148,831 Japanese (on December 
31, 1918) have been induced to settle there, constituting 
but 4.06 per cent of the total population.® Similarly, in 
the case of Korea, in spite of the fact that it is the size 
of the British Isles, it has only about one-third of the 
people of Britain,’ although it is only eleven hours’ sail- 
ing from Shimonoseki. In all, 332,456 Japanese® (on 


268 THE POLICY OF JAPAN IN CHINA 


December 31, 1917) had settled there. Likewise, in the 
case of Manchuria, in spite of fifteen years or so of 
exploitation and colonization, the number of Japanese 
residing there is reported to be only 122,367° (June, 
1918). 

This evident failure of Japan’s attempts at colonization 
is due to three main reasons. The first is a climatic one. 
Japan is a warmer land than either Korea or Manchuria, 
where cold weather prevails in winter. For this reason, 
Japanese farmers prefer Japan to Korea or Manchuria. 
The second reason is the clan psychology of the Japanese. 
They do not like to leave their relatives and native land 
for life. They prefer to remain at home, if possible; 
and if driven to Korea or Manchuria, they will stay there 
only as long as is necessary to accumulate a certain 
amount.of money, and then return to Japan. The third 
reason, probably the strongest, is the inability of the 
Japanese to compete with the Chinese. Given equal terms, 
the Chinese invariably excel the Japanese, both in wage- 
earning capacity and work. In face of this invincible 
economic competition, Japanese settlers have either to 
retire (which many of them do) or to secure Govern- 
mental aid or to resort to unfair means, which many of 
them not unfrequently employ to gain a livelihood? In 
short, given equal terms, the Japanese have almost always 
proved to be the inferior to the Chinese in economic 
competition. 


“Amongst many things that impresses one on visiting 
Manchuria, after an interval of years, most significant 
is the evidence which confronts one on every side of 
the economic inferiority of the Japanese, when competing 
with the Chinese, either as merchants, farmers, artisans, 
or manual laborers. The Japanese have firmly established 
their Imperium in Imperio throughout Southern Man- 
churia: ... but the basic factor of the situation lies 
ever in the Chinaman’s ant-like qualities of sober thrift 
and ceaseless labor.” 74 


WISDOM OF JAPAN’S POLICY IN CHINA 269 


It is, therefore, quite evident that however Japan may 
attempt to absorb Manchuria, none but the Chinese will 
ever really inherit the land. 

What is worse, any attempt on the part of Japan to 
annex South Manchuria and Eastern Inner Mongolia 
will be fatal to herself. Not only will this create hatred 
between the two peoples, but will inevitably cause the 
downfall of Japan. She fought Russia for the integrity 
of China in Manchuria, and now eats her own words 
and desires to annex the very same territory which she 
did not allow Russia to take. If Russia met her defeat 
by the seizure and occupation of Port Arthur and Dalny 
after she had dispossessed Japan of the same, would 
Japan not meet the same fate if she should follow the 
path that once led Russia to defeat? 

Obviously, the solution of Japan’s problem of excess 
population should not take the form of territorial expan- 
sion in South Manchuria and Eastern Inner Mongolia, 
where she is bound to meet the opposition of the Chinese. 
It should rather take the form of industrial and commer- 
cial expansion. In this regard, she should follow the 
beaten path of other nations who have successfully solved 
the same problem. Take for example Germany. Prior 
to 1880, before her industrial and commercial develop- 
ment, large numbers of Germans had to emigrate, but 
after industries were established, the population increased 
from about forty to approximately seventy millions, and, 
instead of emigration, immigration began. Belgium and 
Holland, more thickly populated than Japan, do not have to 
resort to emigration, the increase of their population being 
absorbed by the growing industries. If Japan would learn 
from the experiences of other nations, she would abandon 
her policy of territorial expansion and devote her ener- 
gies to the policy of industrial and commercial expansion. 

Conceding, for argument’s sake, that Japan must have 
an outlet for her surplus population, for which, as we 
have shown, there is as yet no necessity, Japan ought 


270° THE POLICY OF JAPAN IN: CHINA 


not direct her policy of territorial expansion toward re- 
gions already well occupied by the Chinese or other 
people; rather she should seek territories unoccupied or 
only sparsely populated. Still better, she should purchase 
the land to be occupied by the Japanese, thus avoiding 
the seizure of any territory which she cannot occupy 
without a clear conscience. Finally, should she fail to 
find any such unoccupied or sparsely populated land for 
colonization, or should she fail to effect purchases, she 
could send her surplus population to South Manchuria 
and Eastern Inner Mongolia, provided they were willing 
to settle under the Chinese sovereignty. 


Passing from the population problem of Japan, we now 
come to the Chinese question. For reasons previously 
stated, she considers the Chinese question as one vitally 
affecting her own welfare and destiny, in consequence of 
which she maintains the policy of an Asiatic Monroe Doc- 
trine toward the Western Powers and that of political 
control toward China. Regarding the policy of her Asiatic 
Monroe Doctrine, if it were a genuine one, we would 
have no quarrel with Japan, but, on the contrary, we 
would have full respect therefor; but as regards her 
policy of political control, we differ and take open issue. 

In the first place, granting for argument’s sake that 
the political instability of a state, as it affects the welfare 
and safety of a neighboring nation, justifies political con- 
trol, there is as yet no imminent necessity for such a step 
in the case of China. However dark the outlook of 
her political conditions may be, for Japan to assault 
Chinese sovereignty in 1915 by the presentation of 
Group V of the Twenty-one Demands is nothing less 
than a flagrant disregard of the sensitiveness of the 
Chinese. The United States acquired political control 
of Haiti and San Domingo, but this was done only when 
her Monroe Doctrine was in danger and only in order to 
preserve the sovereignty of these states and not to domi- 


WISDOM OF JAPAN’S POLICY IN CHINA 271 


nate or subjugate them. Japan desired to play a role 
in China similar to that of the United States in Haiti and 
San Domingo, but Japan made a premature move, when 
there was as yet no exigency, and especially when Japan 
had failed to live up to a genuine Asiatic Monroe Doctrine. 

In the second place, frankly speaking, Japan is not 
qualified nor worthy to obtain political control of China. 
Though she desired political control primarily to fore- 
stall Western control, she nevertheless had the unworthy 
intention of controlling China so that she might always 
be able to keep her a subordinate and a tool of Japan. 
Thus, she desired control, not for the welfare of China, 
but for her own interest—not to hold it as a secred trust, 
but as a means of exploiting China’s immense natural 
resources and to dominate all the races of the Orient.” 
Again, Japan’s record in Korea has been such that few 
fair-minded men will contend that she is qualified to 
extend her control any further into the mainland of Asia. 
Instead of treating the Koreans as equals and of the 
same race, as she now professes in regard to the Chinese, 
she treated them as inferiors—the hewers of wood and 
drawers of water for the Japanese. Instead of preserving 
the integrity and nationality of Korea, as she professes 
in the case of China, she aimed to absorb Korea and to 
exterminate Korean nationality.4* In view of such a 
glaring abuse of political power over a subject people, 
unless she changes her Korean policy, the impartial mind 
cannot but declare Japan unworthy and disqualified to 
acquire further political control over other peoples in 
Eastern Asia. | 


In the third place, were Japan qualified, her policy of 
political control would no doubt meet the bitter opposi- 
tion of the Chinese. They are determined to preserve 
their independence and sovereignty, just as any self- 
respecting people would. Nay, pacific as they are, they 
are ready to fight and die for their home and liberty. 


272 THE POLICY OF JAPAN IN CHINA 


They began the Revolution of 1911, partly to overthrow 
the yoke of the Manchus, but largely to gain the reins 
of government so that they could save themselves from 
partition or control. Will a people capable of doing 
this be so low as not to resist foreign control, particu- 
larly that of Japan? The student strike and economic 
boycott following the Shantung decision further evi- 
denced the true spirit of Chinese nationalism. Can a 
nation that is able to rise as one man to protest against 
the wreckage of their heritage and injustice to their 
national cause be so supine as not to give a death blow 
to any Power that would deprive them of their inde- 
pendence? It is certain that any policy on the part 
of Japan to control China will meet the united resistance 
of 400,000,000 democratic and liberty-loving Chinese. 

In the fourth place, Japan’s policy to control China 
will inevitably encounter the opposition of Western Pow- 
ers. China is such a large and rich country and the 
commercial interests of the other Powers therein are so 
immense that the Western nations will not permit Japan 
to control her alone. Should there be any necessity for 
control, the Powers would unite and effect a scheme of 
international control, rather than allow Japan to control 
China alone. “In the long run, if China requires ‘advice’ 
or control, it must come from an international con- 
cert... .”1* Again, the formation of the New Inter- 
national Banking Consortium at the close of the World 
War should convince the Japanese that the Western 
Powers would not let Japan gain a stranglehold on 
China’s finance, but, if necessary, would internationalize 
the control. The failure to exempt South Manchuria and 
Eastern Inner Mongolia from the scope of the New Con- 
sortium should further convince Japanese statesmen that 
the Powers, by the advent of the New Consortium, are 
determined to forestall any attempt on the part of Japan 
to gain territorial expansion or political control in 
China. 


WISDOM OF JAPAN’S POLICY IN CHINA 273 


Finally, were she able to overcome these obstacles and 
acquire control of China, it is doubtful whether Japan 
would be able to solve the Chinese question. Fundamen- 
tally, the Chinese must solve their own questions, deter- 
mine their own destiny, work out their own salvation. 
Japan may render assistance in the solution, but she can 
scarcely perform the task which the Chinese must do 
for themselves. 

The solution of Chinese questions does not lie in politi- 
cal control. It lies rather in sympathetic assistance and 
cooperation. It does not permit of insolent affront to 
the sovereignty of China. It rather calls for the pro- 
tection of a genuine “Asiatic” Monroe Doctrine. It does 
not require that Japan should be the overlord and master 
of China. It rather desires that Japan should be the help- 
meet and friend of China. 

Turning now from the Chinese question, we come to 
Japan’s policy of paramount influence. As we have seen, 
this policy is a product partly of the population problem 
of Japan and partly of the Chinese question. Based on 
the needs of a surplus population, this policy aims to ac- 
quire the largest sphere of influence and trade predomi- 
nance. Founded on the necessity of the Chinese question, 
this policy proposes to secure a leading role or a special 
position in China. Regarding this policy we do not differ 
with Japan. We grant that she may gain paramount 
influence in China if she is capable of doing so. Our only 
request is that she should do so in a fair and legitimate 
way. : 

First of all, she must not achieve her paramountcy in 
trade by unfair means.1° She must not try to exclude 
foreign competition by preferential rates or other means 
of prejudicial discrimination. On the contrary, she must 
maintain the principle of the equal opportunity of trade, 
as required by the Open Door doctrine. 

Secondly, she must not attempt to achieve her para- 
mount influence by disregarding Chinese sovereignty. 


274. THE POLICY OF JAPAN IN CHINA 


She should not have occupied the Tsingtau-Tsinan Rail- 
way lying within Chinese jurisdiction and in defiance of 
the repeated protests of China. She should not have 
established police stations in Shantung and Manchuria *° 
in evident usurpation of Chinese sovereignty, nor should 
she have stationed her troops along the Chinese Eastern 
Railway, which was assigned to the protection of the 
Chinese Government. 

Finally, to claim special interests in China, she must 
fulfill special duties toward that country. As right and 
duty are correlatives, Japan cannot enjoy special rights 
in China without fulfilling special duties. As it is, how- 
ever, she not only has failed to fulfill special duties aris- 
ing from geographical propinquity and racial kinship, 
but has grossly disregarded her duties and trespassed 
upon the rights of China. Her seizure of the German 
railway and mines in Shantung, her police stations, her 
troops along the Chinese Eastern Railway, not to men- 
tion Group V of the Twenty-one Demands—all testify 
so loud against the violation of her special obligations 
that she has almost forfeited any special rights that she 
might have acquired by reason of her sacrifices in the 
Russo-Japanese War, or by virtue of geographical pro- 
pinquity and racial kinship. If, therefore, Japan desires 
to claim special rights in China, she must fulfill special 
duties arising out of such propinquity and kinship. In 
other words, the similar natural advantages that give 
her, as claims, special rights in China impose on her 
corresponding special duties. Thus, provided Japan 
observes the principle of equal opportunity of trade and 
the integrity of China and fulfills the special duties re- 
quired by her special rights, China will have no objection 
to any attempt on the part of Japan to gain a position 
of paramount influence. 

Thus far, we have dealt with the errors of Japan in 
solving her own population problem and the Chinese 


WISDOM OF JAPAN’S POLICY IN CHINA 275 


question, and in reaching the position of paramount influ- 
ence in China. We will now go deeper into these causes 
and probe the more fundamental wrongs. As policies are 
national attitudes of one state toward the other formulated 
usually in the best interest of each state, the more funda- 
mental errors of Japan’s policy in China lie in the atti- 
tude of the Japanese, or at least of the responsible Japa- 
nese statesmen. In other words, the wrongs are moral. 


The first fundamental error is Japan’s selfishness. She 
is intent upon the satisfaction of her own needs. In 
a passion of blind selfishness, she overlooks the rights 
of: China. She needs coal, iron and steel. She feels she 
has a right to obtain the same from China, by fair means 
or foul. She needs an outlet for her surplus population; 
so she demarcates South Manchuria and Eastern Inner 
Mongolia as her colonies, and steadily encroaches upon 
these regions, giving no heed to Chinese sovereign rights. 
~When she desires to attain a paramount position in China, 
she does so by excluding foreign influence and by in- 
fringing upon China’s sovereignty. As she desires, for 
her own welfare and dominance, to gain the political 
control of China, she commits open and covert assaults 
on China’s sovereignty. She regards her own interests 
so much that she neglects those of China and sometimes 
attains her own ends at the expense of her neighbor. In 
other words, she does not regard the rights of China 
as her own, but rather as a means to her own gain and 
ascendency. To put it in another way, she subordinates 
the rights and interests of China to those of her own. 
This is not the application of the Golden Rule, but rather 
its subversion and violation. 

The second fundamental error is her attitude of con- 
tempt toward the Chinese. Having defeated China in 
1895, she does not regard her as an equal. Having over- 
come Russia in 1905, her attitude toward China grows 
worse. In the eyes of some Japanese, the Chinese are 


2/6.) THE POLICY OR YAPAN AN GHIN-. 


destined to suffer the fate of the Koreans. That is the 
reason why the Japanese Government has not infrequently 
deliberately insulted China and wantonly obstructed the 
legitimate exercise of China’s sovereign power... For 
instance, when China notified the Japanese Government 
of the cancellation of the war zone,” she resented and 
called this perfectly legitimate action on the part of the 
Chinese Government “improper, arbitrary, betraying, in 
fact, want of confidence in international good faith re- 
gardless of friendly relations,” declaring also “that even 
if your Government actually cancels the communications 
concerning the creation of a war zone, the Imperial Gov- 
ernment will not permit the movement and actions of 
their troops within a necessary period to be affected or 
restricted by such act of cancellation.” 18 

Japan must realize, however, that the Chinese people, 
however disorganized, are man for man the equal of the 
Japanese, both in intellect, physical power and moral 
caliber, and are capable of becoming as great a nation 
as Japan, if not greater. In the face of much plain facts, 
why should Japan entertain contempt for China and thus 
possibly sow the seed of her own fall? The late Bishop 
Bashford said: “. . . It is incredible that the Chinese 
people, outnumbering the Japanese sixfold, man for man 
equaling if not surpassing them in industry and commerce, 
having been stronger as a military power than Japan 
over twenty-nine hundred of her three thousand years 
of history, should reverse history and the laws of sur- 
vival and remain permanently weaker than Japan.” 1° 

The third fundamental error is Japan’s attitude of 
hopelessness in regard to China. She is so convinced 
of her inevitable destruction that she regards her at- 
tempt to gain political control of the latter as a benevolent 
act. She is so sure of China’s incapacity to regenerate 
herself that; except for her intervention, she believes that 
China is bound to fall under the control of the Western 
Powers. In view of this firm conviction, she feels no 


WISDOM OF JAPAN’S POLICY IN CHINA 277 


guilt in attempting to seize the reins of government in 
China. On the contrary, she feels it so imperative a 
remedy for China’s illness that she must postpone 
Group V for future discussion. However correct the 
diagnosis of the Japanese statesmen in relation to the 
condition of the Peking Government, she nevertheless 
fails to see the source of salvation already visible in the 
Chinese body politic,—the rising spirit of Chinese nation- 
alism. Bankruptcy and downfall may threaten the 
Chinese Government, but the Chinese people, awakened 
and fully determined to preserve their own liberty, will 
one day turn calamities into blessings. If Japanese 
statesmen could only see this better side of the Chinese 
national life, they would probably change their attitude 
of pessimism and antagonism to one of hopefulness and 
friendliness. 

The last, but not the least, fundamental error is the 
general lack of good-will on the part of Japan towards 
the Chinese. With the exception of a minority, there 
are numerous Japanese who would not desire to see a 
strong and united China, but would rather see China 
weak, divided, and, still better, controlled by Japan. 
Prince Yamagata said: “Japan wants a weak and inca- 
pable China; and a weak China under a weak emperor, 
subject to Japan’s influence, would be the ideal state.” 7° 
Viscount Ishii said: “Japan could not regard with equa- 
nimity the organization of an efficient Chinese army such 
as would be required by her active participation in the 
war, nor could Japan fail to regard with uneasiness a 
liberation of the economic activities of the nation of 
400,000,000 people.” 74. “Japan views with great alarm 
the moral awakening of the four hundred million 
Chinese,” said Baron Makino.???2 From these utterances 
of the highest Japanese authorities, one cannot but con- 
clude, though most reluctantly, that Japan entertains little 
good-will towards China. Yet Japan must realize that 
the rise of China as a great power is inevitable. Just 


278 THE POLICY OF JAPAN IN CHINA 


as the nineteenth century witnessed the rise of Germany, 
Italy and Japan, so the twentieth century shall witness 
the rise of modern China. There is no force on earth, 
except the Chinese themselves, that can hold back this 
outcome. Will Japan stand in the way of China’s prog- 
ress? Such an attitude is unworthy of so great a people 
as the Japanese who profess to exemplify the canons of 
Bushido and who have demonstrated such prowess in the 
Russo-Japanese War. 


The first step in the revision of Japan’s policy is to 
change her entire attitude toward China. She must do 
away with these fundamental errors. She must liberate 
herself from the bondage of selfishness and regard the 
rights and interests of China as sacred as her own. Into 
the bargain, she must discard her contempt for the 
Chinese and assume an attitude of due respect and cor- 
diality. Further, she should not concentrate her mental 
gaze on the corruption and inefficiency of the Chinese 
Government, so evident now, thus inducing an attitude 
of hopelessness regarding the future, but should rather 
note the promising and vigorous aspect of Chinese na- 
tional life—the younger generation and the awakened 
nationalism. Lastly, she should not desire to see China 
weak and divided, but she should rather cherish abound- 
ing good-will and become her friend and counselor in 
her period of reconstruction. 

Having thus fundamentally changed her national atti- 
tude towards China, Japan should then revise her policy. 
She cannot apply her five policies at the same time, as 
she has so far attempted to do. They are irreconcilable 
and inconsistent with one another. She cannot adopt the 
policy of territorial expansion and political control, and 
yet at the same time expects to achieve commercial ex- 
pansion or to enforce the Asiatic Monroe Doctrine. Simi- 
larly, she cannot adopt the policy of economic exploita- 
tion or of commercial expansion and the “Asiatic”? Mon- 


WISDOM OF JAPAN’S POLICY IN CHINA 279 


roe Doctrine, and yet at the same time aim to seek 
territorial expansion and political control. She must 
choose the one or the other. 

Should she choose the policy of territorial expansion 
and political control, she should then abandon the policy 
of commercial expansion, outright, for such a policy will 
inevitably kill the good-will of the Chinese and hinder 
commercial relations. Similarly, she should honestly dis- 
avow the “Asiatic” Monroe Doctrine, for a policy of terri- 
torial expansion and political control will so violate the 
principle of her “Asiatic” Monroe Doctrine that it will 
become like sounding brass. Besides, she must be fully 
prepared to fight the Chinese, as the latter are deter- 
mined to preserve their homes and liberty. In that case, 
she will have to lay upon herself and her people the 
crushing burden of militarism, with the inevitable con- 
sequences of exorbitant taxation, the high cost and low 
standard of living, a low intellectual and moral standing, 
and the backwardness of industry and degeneration of 
race.** She must further be prepared to meet the united 
opposition of the Great Powers, particularly Great Britain 
and the United States, who, pledged as they are to the 
Open Door doctrine, will not let Japan alone to extend 
her territorial limits in China or gain the political con- 
trol there. It is practically certain that any attempt on 
the part of Japan to seek territorial expansion or politi- 
cal control will result in the ruin of Japanese trade in 
China, the nullification of her “Asiatic” Monroe Doctrine, 
the bitter opposition of the Chinese, the curse of mili- 
tarism and the opposition and disapprobation of the 
Powers.?5 

On the other hand, should Japan adopt the policy of 
commercial expansion and an “Asiatic”? Monroe Doctrine, 
she must first abandon the policy of territorial expansion 
and political control, which, as we have seen, are incon- 
sistent and irreconcilable with the policy of commercial 
expansion and her “Asiatic” Monroe Doctrine. Hav- 


280 THE POLICY OF JAPAN IN CHINA 


ing done so, she can then consistently seek the good- 
will of the Chinese by the maintenance of a genuine Mon- 
roe Doctrine which she proposes to employ as a means 
to protect the territorial integrity and political independ- 
ence of China. Having thus won the good-will of the 
Chinese, her commercial expansion and position of para- 
mount influence will naturally and inevitably follow. In 
other words, she should revert to the days preceding her 
victories over Russia and observe strict adherence to 
the principles of the Open Door, with this difference, 
however, that the passive pledge to respect the integrity 
and independence of China should be changed to a posi- 
tive engagement to protect the same. In this case, Japan 
can remain in peace with China and maintain friendship 
with the other Powers. Thus can she attain her destiny 
of becoming the leader and protector of the Far East for 
the next generation. 

At this parting of the ways, which road will Japan 
take? It is fondly hoped and sincerely prayed that her 
sagacious statesmen will make the right choice. 


NOTES TO CHAPTER XVII 


1, Vide supra, chapter on the Policy of Territorial Expansion. 

2. Statesmen’s Year Book, 1920, p. 75. 

3. Hornbeck, Contemporary Politics in the Far East, p. 271. 

3A. Statesmen’s Year Book, 1920, on Dec. 31, 1918, p. 1018. 

4. F. H. King, The Farmers of Forty Centuries, pp. 424-426. 

5. Bashford, “China, An Interpretation, p. 396. 

6. Japan Year Book, 1920-21, p. 723, on Dec. 31, 1918. 

7. Korea, 16, 619, 431, Japan Year Book, 1920- 21, p. 703, Dec. 
31, 1917; British Isles, 45, 516, 259, Statesmen’s Year Book, 1920, 
p. 13, census taken April 2, 1911. 

8. Japan Year Book, 1920-21, p. 703, on Dec. 31, 1917. 

9. Japan Year Book, 1920-21, Dp. 34, June, 1918, Returns by 
the Foreign Dept. of Japan. 

10. Vide supra, chapter on the Policy of Paramount Influ- 
ence. 

11. Millard’s Review, Oct. 9, 1920, p. 309, J. O. P. Bland, on 
China’s New Strong Man—Chang Tso- hin, quoted from North 
China Daily News. 


WISDOM OF JAPAN’S POLICY IN CHINA 281 


12. Vide supra, chapter on the Policy of Political Control. 

13. For a full account of Japan in Korea, see Mackenzie, 
Korea’s Fight for Freedom. 

14. Editorial, “The Nation,’ London, May 8, 1915, quoted in 
Millard, Our Eastern Question, pp. 239- 241. 

15. Vide supra, chapter on the Policy of Paramount Influence. 

16. Editorial, Millard’s Review, Feb. 19, 1921, p. 637 et seq. 

17. The Shantung Question, Presented by China to the Paris 
Peace Conference, published by the Chinese Natl. Welfare Soc. 
of America, March, 1920, App., Note of Jan. 7, 1915, p. 61. 

18. Ibid., pp. 61 -62, Note of Jan. 9, 1915, 

19. Bashford, China and Interpretation, p . 409. 

20. Millard, Our Eastern Question, p. 168, 

21. Millard, Democracy and the Eastern Question, p. 99. 

22, 23. H. K. Tong, article on How Japan’s Policy Is Under- 
mining Her Position in China, Millard’s Review, Aug. 9, 1919, 
p. 388. 

24. Cf. Tokio Nichi Nichi, translated in Japan Weekly Chroni- 
cle, quoted in Millard’s Review, Oct. 23, 1920, pp. 402-403, the 
Statement of Osaki Yukio: “The low intellectual and moral 
standing of this nation and the backwardness of various indus- 
tries here are due to many causes. But the most important of 
them is the sway militarism holds over the country... . Mili- 
tarism has never long kept company with national prosperity, as 
conclusively proved by the history of the Tsing Dynasty of 
China, of Germany, Russia, Austria and Turkey. Militarism is 
a principle ruinous to the state.” 

25. While defense may be made that the United States, in 
spite of the Monroe Doctrine, extended westward in accordance 
with her manifest destiny and at the expense of Mexico, the 
vital difference must be pointed out that the United States ex- 
tended in the direction of practically unoccupied or most sparsely 
populated regions, and not infrequently by way of purchases, 
whereas Japan aims to extend over regions well occupied and 
populated by the Chinese and in deliberate violation of China’s 
sovereign rights. 


he 
, aT 


, ah 


PAR TV, 


IMPAIRMENTS OF CHINA’S SOVEREIGNTY 


XVIII. 


MLK 
ord 
XT. 
XT L 


XXIII. 


EXTRATERRITORIALITY AND CONSULAR JURIS- 
DICTION. 


CONCESSIONS AND SETTLEMENTS. 

LEASED TERRITORIES. 

SPHERES OF INFLUENCE OR INTEREST. 
Tue Most Favorep NATION TREATMENT. 


TARIFF AUTONOMY. 


XVIII 


EXTRATERRITORIALITY AND CONSULAR 
JURISDICTION 


WE have so far surveyed the policies of the Great 
Powers in China, dealt in Part II with Russia, France, 
Germany, Great Britain and the United States, and in 
Part III, exclusively with Japan. We will now proceed 
to consider the impairment of China’s sovereignty, as 
represented by Extraterritoriality and Consular Jurisdic- 
tion, Settlements and Concessions, Leased ‘Territories, 
Spheres of Influence, the Most Favored Nation Treat- 
ment, and Tariff Autonomy. We will begin with the 
first-named—Extraterritoriality and Consular Jurisdic- 
tion. 

By extraterritoriality is meant “a form of privilege or 
exemption consisting of a limitation of territorial sov- 
ereignty with regard to certain persons and certain places, 
which under international law enjoy the privilege of 
remaining outside the jurisdiction of the state in whose 
territory they are situated;’’* or, in short, it is “an ex- 
clusive exemption from the operation of the local law.” ? 

Defined as such, it is a privilege granted in limitation of 
territorial sovereignty. In international law it is a funda- 
mental principle that the territorial sovereign exercises 
supreme power over all the people, natives or aliens, re- 
siding within the limits of his territory. With the con- 
cession of this privilege, however, the supreme power 
of the territorial sovereign is limited or impaired to the 
extent that aliens enjoying this form of special privilege 
are exempted from the jurisdiction of his tribunals. 

Again, it is a privilege that confers the right to exercise 
jurisdiction over the nationals in a foreign territory. 

285 


286 IMPAIRMENTS OF SOVEREIGNTY 


This right is usually exercised by legislation through the 
legislative organ of the government, thus making laws 
to govern nationals abroad, and through the investment of 
authorities accruing from laws thus made in consular and 
diplomatic officers residing abroad, and also in the estab- 
lishment of consular courts and other extraterritorial 
courts for the administration of justice in the case of 
nationals. In brief, it extends jurisdiction over the 
realm of another state and functions with respect to ad- 
ministration of justice over nationals abroad on behalf 
of the territorial sovereign. 

Besides, it is a privilege granted with the consent of 
the territorial sovereign by way of conventions or treaties, 
which form the basis of the privilege and without which 
no foreign Power has the inherent right to enjoy the 
same. Considered in this light, it is, consequently, merely 
a delegated power from the territorial sovereign to for- 
eign states enjoying the privilege. As such, in accordance 
with the established rules of interpretation, the exercise 
of the delegated power must be founded on express or 1m- 
plied grant; any undelegated or unsurrendered Power is 
construed to remain intact with the territorial sovereign ; 
and, in case of doubt, the uncertainty will be absolved in 
favor of the sovereign grantor. In other words, the rule 
of strict construction will apply. 

Further, it is a privilege granted only for so long a 
period as the territorial sovereign is not capable of ful- 
filling the duties of administering justice and affording 
protection to life, liberty and property in accord with 
modern or Western standards of civilization. This, ipso 
facto, means that as soon as the territorial sovereign is 
capable and ready to fulfill the necessary duties, the 
privilege should be surrendered. It is thus a temporary 
privilege exacted to penalize the territorial sovereign for 
the relative backwardness of its judicial system, and with 
the implied obligation to surrender the same as soon as 
the judicial administration of the territorial sovereign 


CONSULAR JURISDICTION 287 


has advanced to a certain degree of proficiency. “The 
case of Japan,” said Oppenheim, “is an example of the 
readiness of the Powers to consent to the withdrawal of 
consular jurisdiction in such states as soon as they have 
reached a certain level of civilization.” ® 


Having stated the general principles underlying extra- 
territoriality, we will now briefly sketch its historical de- 
velopment in China. Prior to the advent of the Maritime 
Powers, China was accustomed to make reciprocal con- 
cession of extraterritorial jurisdiction to the neighboring 
Oriental states. That is, in extending extraterritoriality 
to the other Oriental states, she demanded and acquired 
similar reciprocal privileges. So, in the very first treaty 
—that of Nerchinsk with Russia in 1689,—reciprocal con- 
cessions of extraterritoriality were granted (Art. 2). 
Again, in the Treaty of 1727, similar concessions of re- 
ciprocal extraterritoriality were provided (Art. 10),° 
which were, however, altered and amplified by the sup- 
plementary treaty of 1768, minutely stipulating the pro- 
cess of arrest and delivery of criminals.® 

Even in the Treaty of Kouldja in 1851, which took 
place about a decade after the Maritime Powers had 
exacted the privilege of extraterritoriality from China, 
the arrangement was still for a reciprocal concession of 
extraterritoriality (Art. 7).7. And it was not until 1858, 
when Russia sought concessions similar to those accorded 
to the Maritime Powers under the egis of the British and 
French arms, that Russia secured the same privilege of 
extraterritoriality as were enjoyed by the maritime pow- 
ers (Art. 7).° Likewise, in the Treaty of Commerce and 
Navigation with Japan in 1872, the privilege of extra- 
territoriality was not granted unilaterally, but a recipro- 
cal concession thereof was made (Art. 9).° And it was not 
until Japan had defeated China in the War of 1894-5 that 
she obtained privileges of extraterritoriality such as were 
enjoyed by the Maritime Powers. In the Treaty of Shi- 


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288 IMPAIRMENTS OF SOVEREIGNTY 


monoseki in 1895, the grant of the most favored nation 
treatment was made (Art. 6),?° which naturally included 
the privilege of extraterritoriality. In the subsequent 
Treaty of Commerce and Navigation in 1896 the privi- 
lege was specifically stipulated (Art. 20).14 Similarly 
in the Treaty of Amity and Commerce with Korea in 
1899, despite the fact that the other Powers had prac- 
tically enjoyed extraterritorial privileges for about half 
a century, Korea was given, not the privilege of extra- 
territoriality as enjoyed by the other Powers, but the 
reciprocal concession of extraterritorial jurisdiction (Art. 
5).12. Thus the thesis can be ventured that, prior to the 
advent of the Maritime Powers, China was accustomed 
to the practice of reciprocal concessions of extraterritorial 
jurisdiction in her relations with neighboring Oriental 
states, and, as we shall see presently, that the privilege 
of extraterritoriality as now enjoyed by the Powers un- 
ilaterally was originated by the Maritime Powers. 

As the Maritime Powers arrived (particularly Great 
Britain), the history of extraterritoriality turned a new 
leaf. They insisted on the enjoyment of the privilege, and 
yet at the same time, relying upon the superiority of their 
own civilization, would not consider the idea of recipro- 
cating the same. Thus, China insisted on the assertion 
of territorial jurisdiction over these “barbarians,” whereas 
the Maritime Powers resisted and claimed exemption. 
Relating the instances of this conflict, J. B. Moore 
wrote: 7% 


“When crimes had been committed there by foreigners 
other than Portuguese, the Government had never failed 
to assert its jurisdiction to seize the accused if accessible 
on land, and to demand his surrender if on board of a 
ship. The claim of surrender had sometimes been suc- 
cessfully resisted, and some times acquiesced in. In 
1780, a French seaman, who killed a Portuguese seaman 
in one of the hongs of Canton, was delivered up to the 
local authority, by whom he was tried, convicted, and ex- 


CONSULAR JURISDICTION 289 


ecuted. In 1784 the gunner of an English merchant ship, 
who, in firing a salute, had killed a Chinese, was given 
up and executed... . Captain Elliott, of the British 
navy, however, at an early stage of the controversy be- 
tween his Government and that of China, refused to give 
up some English sailors who were charged with homi- 
cide,’ 


Supporting this firm position, as early as 1833, a Brit- 

ish Court of Justice for China was proposed and passed," 
the carrying out of which, however, was unsuccessful. 
Again, in 1838, the same measure was proposed in the 
House of Commons: “with even greater power and 
jurisdiction.” 7® This was, however, withdrawn on ac- 
count of strong opposition in the House. And, despite 
these repeated efforts, it was not until after the Opium 
War that England obtained the privilege. 
_ In the Treaty of Nanking in 1842, there was no spe- 
cific mention of the grant of extraterritoriality, but in 
the subsequent general regulations governing British trade 
at the five ports of Canton, Amoy, Foochow, Ningpo, and 
Shanghai, concluded on October 8, 1843, the first pro- 
vision of the concession of extraterritoriality appeared.”” 


“Whenever a British subject has reason to complain of 
a Chinese, he must first proceed to the consulate and state 
his grievance; the consul will thereupon inquire into the 
merits of the case, and do his utmost to arrange it ami- 
cably. In like manner, if a Chinese have reason to com- 
plain of a British subject, he shall no less listen to his 
complaint, and endeavor to settle it in a friendly man- 
ner. If an English merchant have occasion to address 
the Chinese authorities, he shall send such address through 
the consul, who shall see that the language is becoming; 
and if, otherwise, will direct it to be changed, or will re- 
fuse to convey the address. If, unfortunately, any dis- 
putes take place of such a nature that the consul can- 
not arrange them amicably, then he shall request the as- 
sistance of a Chinese officer, that they may together ex- 


290 IMPAIRMENTS OF SOVEREIGNTY 


amine into the merits of the case, and decide it equitably. 
Regarding punishment of English criminals, the English 
Government will enact the laws necessary to attain that 
end, and the consul will be empowered to put them in 
force; and regarding the punishment of Chinese criminals, 
these will be tried and punished by their own laws, in the 
way provided for by the correspondence which took place 
at Nanking, after the concluding of the peace” ® (Art. 
E67) 


In the subsequent Treaty of 1858, which confirmed the 
Treaty of Nanking and abrogated the supplementary 
treaty and the general regulations of trade, the substance 
of which was incorporated in the treaty in question (Art. 
1), the above provision was consequently likewise abro- 
gated, but its substance was embodied in the following 
ATICLES (30 | 


“Article 15. All questions in regard to rights, whether 
of property or person, arising between British subjects, 
shall be subject to the jurisdiction of the British author- 
ities. 

“Article 16. Chinese subjects who may be guilty of 
any criminal act toward British subjects shall be ar- 
rested and punished by the Chinese authorities accord- 
ing to the laws of China. 

“British subjects who may commit any crime in China 
shall be tried and punished by the consul, or other public 
functionary authorized thereto according to the laws of 
Great Britain. 

“Justice shall be equitably and impartially adminis- 
tered on both sides.” 


The British having thus set the precedent, the United 
States obtained a similar privilege by the Treaty of 
Wanghia, July 3, 18447 (Arts. 21 and 25). Similarly, 
France obtained the same concession by the Treaty of 
Whampoa, October 24, 18441 (Arts. 25, 27, 28). 

Following France came the other powers which ob- 


CONSULAR JURISDICTION 291 


tained the privilege of extraterritoriality by their respec- 
tive treaty stipulations, as follows: 


Norway AND SWEDEN, March 20, 1847 (Arts. 21, 25 
20) # 

Russia, June 13, 1858 (Art. 7).?8 

GERMANY, September 2, 1861 (Arts. 34, 35, 38, 39). 

Denmark, July 13, 1863 (Arts. 15, 16, 17).?° 

NETHERLANDS, October 6, 1863 (Art. 6).7° 

SPAIN, October 10, 1864 (Arts. 12, 13, 14).?7 

Betcium, November 2, 1865 (Arts. 16, 19, 20).78 

IraLy, October 26, 1866 (Arts. 15, 16, 17).*° 

Austria-Huneary, September 2, 1869 (Arts. 38, 39, 
40) .°° 

PERu, June 26, 1874 (Arts. 12, 13, 14). 

Brazit, October 3, 1881 (Arts. 9, 10, 11).%2 

PortuGaL, December 1, 1887 (Arts. 47, 48, 51). 

JAPAN, July 21, 1896 (Arts. 20, 21, 22) .*4 

Conco FREE STATE, July 10, 1898 (Art. 1).* 

Mexico, December 14, 1899 (Arts. 13, 14, 15).%° 

SWEDEN, July 2, 1908 (Art. 10).%" 

Cute, February 18, 1915.%8 

SWITZERLAND, June 13, 1918.°% 4° 


Passing from this brief sketch of extraterritoriality in 
China, we now come to the exercise of extraterritorial 
jurisdiction as it exists in China. With respect to the 
extent of extraterritorial jurisdiction, certain principles 
can be deduced from the treaty provisions stipulating the 
extraterritorial privilege. If the dispute is wholly of 
Chinese parties in which no foreigners are involved, the 
jurisdiction belongs exclusively to Chinese courts, and 
the case should be settled according to the Chinese law 
and procedure. If a controversy is between the 
parties of the same treaty Power enjoying the privi- 
lege of extraterritoriality, the jurisdiction lies exclusively 
with the consular and other courts established by the 
treaty Power in question, and the case is to be settled 
according to the law and procedure of that state. If the 


292 IMPAIRMENTS OF SOVEREIGNTY 


case is between the nationals of two or more treaty Pow- 
ers enjoying the privilege of extraterritorial jurisdiction, 
the jurisdiction lies, not with the Chinese courts, but 
with the authorities of the States concerned in accordance 
with agreements they have made covering such cases. 
If the controversy is between the parties of the non- 
treaty Power and the treaty Power, the jurisdiction is 
determined by the nationality of the defendant; if he is 
of the treaty Power, the jurisdiction is in the courts of 
the treaty Power in question; if of the non-treaty Power, 
the jurisdiction is in the courts of China; if the parties 
are all of non-treaty Powers, the jurisdiction lies wholly 
in Chinese courts. If, however, a controversy is between 
the Chinese and the nationals of the treaty Power, the 
general principle governing such cases is that the juris- 
diction goes with the nationality of the defendant. In 
other words, “the plaintiff follows the defendant into 
the court of the latter’s nation.” ** 

Thus it may be observed that extraterritorial juris- 
diction follows the person of the national, In other words, 
it is personal, and follows the nationals wherever they 
go or reside. It is not alone limited to the settlements 
and concessions or treaty ports, where aliens are to reside, 
but it extends as far, and as wide, as the nationals go. 
It can therefore be said that the extent of the extraterri- 
torial jurisdiction is only limited by the realm of the terri- 
torial sovereign, or to employ another expression, “‘it is 
co-extensive with the confines of the Empire.” * 

Further, extraterritorial jurisdiction exempts foreign 
nationals enjoying the privilege, not only from the ju- 
dicial process of local tribunals, but also from the liabil- 
ity of search. Their houses or vessels within treaty 
ports are immune from search by territorial authorities. 
Fugitives from law hiding in these houses or vessels 
can be extradited only “on due requisition by the Chinese 
authorities, addressed to the British consul.” #2 In 1913, 
during the second revolution, the Chinese Government 


CONSULAR JURISDICTION 293 


proposed that under warrants viséd by the consul, the 
houses and vessels of foreigners should be subject to 
search, thus checking any collusion between the Chinese 
and foreigners, but the proposal was rejected as being 
contrary to treaty rights.** This privilege of immunity, 
however, is not absolute. It does not mean that the 
nationals can so abuse the privilege as to defy the terri- 
torial laws or to menace public health or public safety, 
in which case the territorial sovereign will have the right 
of reasonable restraint.*° 

To these general principles governing the scope and 
extent of extraterritorial jurisdiction, there are three spe- 
cial exceptions. First, there is the special status of Ko- 
reans in Chientao. While they are placed on an equal 
footing with the Chinese, they are denied the full privi- 
lege of extraterritoriality, and are accorded only a limited 
or diminished form of extraterritorial right. Both in 
civil and criminal cases, they are subject to Chinese juris- 
diction, although the Japanese consular officers may be 
present and, in case of injustice, can ask for a new trial. 
It is only in the cases concerning the lives of persons 
that previous notice must be given to the Japanese off- 
cer (Art. 4).*6 

Second, there is the special ‘status of the foreign na- 
tionals in Chinese Government service. In general, they 
still remain within the extraterritorial jurisdiction of their 
own authorities. In particular cases, however, they are 
exempted. In acts done in official capacity, they may not 
be civilly liable in consular courts; ** and in criminal 
liabilities, they may plead the act of state.*® In civil em- 
ployment, when they are placed under discipline, their 
superiors have the authority to enforce obedience.*® In 
military service, by virtue of the necessity of the situa- 
tion, they are supposed to have voluntarily waived their 
extraterritorial protection and placed themselves under 
the jurisdiction of the territorial sovereign.*° 

Third, there is the special status of the Chinese in the 


294 IMPAIRMENTS OF SOVEREIGNTY 


employ of foreign nationals. As a rule, they are still 
subject to Chinese jurisdiction just as other Chinese citi- 
zens. They are, however, not to be arrested without 
notice to the consul of the employer.** 


Apart from these special cases, the extraterritorial 
jurisdiction is nevertheless subject to certain limitations. 
These are numerous, but it will suffice to mention the 
more important ones. Limitations can arise from treaty 
provisions. For instance, foreigners violating customs 
laws are subject to the confiscation of their vessels and 
goods.®? Limitations can also be founded on interna- 
tional law. In accordance with well-established rules 
of interpretation, extraterritorial jurisdiction being a dele- 
gated power, the unsurrendered power is construed to 
remain intact with the territorial sovereign, and any 
doubt as to the grant must be absolved in favor of the 
territorial sovereign. Under this construction, nationals 
of non-treaty powers or of treaty powers enjoying no 
extraterritorial privileges are subject to the jurisdiction 
of China. Being so, they cannot claim the protection 
of the other treaty powers having extraterritorial privi- 
leges, nor can the treaty powers claim the right of pro- 
tection.°* And herein lies an important difference be- 
tween the practice of extraterritoriality in Turkey and 
other countries of the Levant, and that in China. In 
Turkey and other states of the Levant, the treaty Powers 
are permitted to take under their protection, as protégés, 
the nationals of non-treaty Powers, but in China, this 
right does not exist.*4 

Further, the exemption from the jurisdiction of local 
courts does not mean exemption from obedience to local 
laws and municipal ordinances. The nationals, while 
enjoying extraterritorial rights, are still bound to obey 
local ordinances for public health and order.®® 

In addition, limitations can also arise from statutes gov- 
erning the exercise of extraterritorial jurisdiction. The 


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CONSULAR JURISDICTION vate 


extraterritorial courts, exercising the delegated power and 
acting under the direction of the statutes, are subject to 
the limitations set by legislation or treaty stipulations. 
Even though the act may be within the extent of the 
extraterritorial jurisdiction, if it is not included in the 
statutes, the extraterritorial jurisdiction is limited to that 
extent? 

Finally, as the extraterritorial jurisdiction is personal, 
this fact in itself constitutes an inherent limitation. Con- 
sular courts have jurisdiction only over their respective 
nationals, and not over any other subjects. Consequently, 
they cannot punish Chinese plaintiffs for perjury or con- 
tempt of court, nor can they entertain any counter-claim 
or set-off, however just it may be. 


Having seen the scope and the limitations of extra- 
territorial jurisdiction, we now proceed to the extraterri- 
torial courts that are vested with the authority to exer- 
cise this jurisdiction. In general, all consuls of the 
treaty powers are authorized to exercise extraterritorial 
jurisdiction, such courts being known as_ consular 
courts. For the purposes of appeal the diplomatic offi- 
cials at Peking are, in the main, empowered to exer- 
cise appellate jurisdiction, but in the case of Great Britain, 
the British Supreme Court for China was established by 
the Order in Council of October 24, 1904,5* and in the 
case of the United States, the United States Court for 
China was instituted by the Act of June 30, 1906.°° From 
His Britannic Majesty’s Supreme Court for China, where 
more than £500 are involved, further appeal may be taken 
to His Majesty in Council, and in other cases, the Su- 
preme Court may give leave, as it sees fit, to appeal to 
the Privy Council.°° From the United States Court for 
China, further appeal can be taken to the United States 
Circuit Court of Appeals of the Ninth Judicial Circuit, 
and from thence to the Supreme Court of the United 
States.*? 


296 IMPAIRMENTS OF SOVEREIGNTY 


The laws applied in these extraterritorial courts are the 
laws of the nations exercising the extraterritorial juris- 
diction. 


“So long as the laws of the two countries differ from 
each other there can be but one principle to guide judicial 
proceedings in mixed cases in China, namely, that the 
case is tried by the official of the defendant’s nationality ; 
the official of the plaintiff’s nationality merely attending 
to watch the proceedings in the interest of justice. If 
the officer so attending be dissatisfied with the proceed- 
ings, it will be in his power to protest against them in 
detail. The law administered will be the law of the 
officer trying the case” (Art. 3, Sec. 2, The British Treaty 
of Chefoo, 1876). 


With respect to procedural law, there is a general agree- 
ment that it is the procedural law of the Powers having 
extraterritorial jurisdiction that is applied. With ref- 
erence to substantive law, however, there is a difference 
of opinion. Obviously, foreigners enjoying extraterri- 
toriality should be adjudged according to the substantive 
law of their own countries; and yet, as they are in duty 
bound to obey local laws and municipal ordinances, they 
must also be adjudged and punished according to the 
substantive law of China. On the one hand, it is there- 
fore maintained that ° 


“while it may be admitted that justice and fair deal- 
ing require that foreigners offending against laws rend- 
ered necessary in China, as well as elsewhere, by a right 
regard to the safety and convenience of the communi- 
ties in which they reside and of the government upon 
whose soil they stand, should be punished for their of- 
fences, it appears difficult to admit the broad proposition 
that they are amenable to Chinese law in the same sense 
as natives of China are, or in point of fact, in any sense 
which would allow us to assent to the Chinese proposi- 
tion.” 


CONSULAR JURISDICTION 297 


On the other hand, it is contended that * 


“with reference to the Treaty Powers themselves, it may 
be said that extraterritoriality entitles them to exercise 
so much authority over their nationals in China as is 
necessary to enforce effectively, by judicial methods, the 
laws declared to be in force by the Emperor of China.” 


Despite this difference of opinion, the law of real 
estate as applied in the extraterritorial courts is well set- 
tled. “It is a fundamental principle of all systems of 
jurisprudence that rights of realty should be determined 
according to the lex situs.” ** It is consequently decided 
that the law governing real estate in China should be the 
local law or custom of China. In MacDonald v. Ander- 
son,®° Justice Bourne, delivering the opinion of the Court, 
said: 


“T hold that the law of China ought to be applied to 
the facts of this case. The Court administers the law 
of England (1863 Order in Council, Art. 5), but what 
is the law of England in regard to immovable property 
situated within the dominions of the Emperor of China? 
Undoubtedly rights in respect of such property shall be 
governed by the lex situs, that is, by the law of China.” 


In the Chino-Japanese Treaties of May 25, 1915, it 
was expressly stipulated that 


“mixed civil cases between Chinese and Japanese relat- 
ing to land shall be tried and adjudicated by delegates of 
both nations conjointly in accordance with Chinese law 
and local usage” (Art. 5).°° 


Turning to the Chinese side of the subject, the trib- 
unals that have jurisdiction over mixed cases between a 
Chinese defendant and a foreign plaintiff have been com- 
monly known as “mixed courts.” As in such cases the 
defendants are Chinese, the courts having jurisdiction 


208 IMPAIRMENTS OF SOVEREIGNTY 


are Chinese courts, and the laws applied are Chinese laws, 
both substantive and procedural. A foreign assessor, 
however, as provided in the treaties, is usually permitted 
to attend the trial. He is usually a properly authorized 
official of the plaintiff’s nationality. ‘He shall be granted 
all proper facilities for watching the proceedings in the 
interest of justice. If he so desires, he shall have the 
right to present, to examine, and to cross-examine wit- 
nesses. If he is dissatisfied with the proceedings, he 
shall be permitted to protest against in detail.” ° 

Among the so-called “mixed courts,” the Shanghai In- 
ternational Mixed Court has developed to be a unique ex- 
ception. Originally it was a mixed court established in 
the International Settlement of Shanghai, for the trial 
of cases where the Chinese are defendants with the at- 
tendance of the foreign assessor on behalf of the for- 
eign plaintiff. In such cases the approval of the assessor 
is necessary to the judgment of the Court.®* Later, how- 
ever, the jurisdiction of the Court was extended to cases 
where both or all of the parties are Chinese. While evi- 
dently it is contrary to the treaty stipulation which pro- 
vides that the foreign assessor can attend only when a 
foreigner is the plaintiff, the extension of the jurisdic- 
tion is nevertheless maintained on the ground that it is 
necessary to have foreign oversight in the case where the 
parties are residents of foreign settlements, and that it is 
essential for the enforcement of municipal ordinances.® 

Since 1911, the Shanghai International Mixed Court 
has assumed a new status. Because of the Revolution 
and the temporary collapse of Chinese authority, the 
court was taken over by the consular body of Shanghai, 
including the prisons attached thereto.”? Ever since the 
annexation, the court has remained virtually an inter- 
national court administered by the consular body of 
Shanghai. Negotiations have been carried on for its 
restoration, but so far no agreement has yet been 
reached.” 


CONSULAR JURISDICTION 299 


Before passing from the system of extraterritoriality 
as it exists in China, we must observe some unwarranted 
practices committed by the Treaty Powers under the egis 
of extraterritoriality and in excess of such jurisdiction, 
and sometimes in apparent defiance of China’s sover- 
eignty. First, there are the foreign post-offices established 
in the treaty ports by the Powers. Their establishment 
was not sanctioned by treaty stipulations, and conse- 
quently it is an infringement on the sovereignty of China. 
“They are not established with the consent of China, 
but in spite of her. . . . Their establishment materially 
interferes with and embarrasses the development of the 
Chinese postal service, and is an interference with Chinese 
sovereignty.” “* Besides, there are foreign wireless and 
telegraphic installations in China which are there in con- 
travention of China’s sovereignty. 

Second, there are police boxes, or stations, established 
‘by Japan in Manchuria. “Since 1905 the Japanese Gov- 
ernment has established and gradually extended police 
agencies in Manchuria, notwithstanding the repeated pro- 
test of the Chinese authorities. The number of such 
agencies, as reported in 1917 by the local authorities of 
Fengtien and Kirin Provinces, has reached twenty- 
seven.” ™ The establishment of these police boxes, or 
stations, has no legal justification. While China has 
assented to the maintenance of foreign police in conces- 
sions and settlements either by way of treaty provisions 
or “land regulations,’ she has in no wise ever given 
her sanction to the stationing of a police force elsewhere 
in the territory of China. On the other hand, Japan has 
maintained that the establishment of police is but a corol- 
lary of extraterritorial jurisdiction.” 

In reply to this, the Chinese Government contended 
that the stationing of police cannot be regarded as a corol- 
lary of extraterritoriality, and China has not recognized 
the legitimacy of the measure, but, on the contrary, has 
repeatedly lodged protests against it.” 


300 IMPAIRMENTS OF SOVEREIGNTY 


Third, there is the maintenance of foreign troops in 
China. While there are troops whose presence is sanc- 
tioned by treaties, such as the legation guards at Peking 
and the Allied guards on the Peking-Mukden Railway, 
whose usefulness and raison d’étre, however, has passed 
beyond the original purpose of their maintenance, there 
are, nevertheless, foreign troops stationed in China en- 
tirely unauthorized by law or treaty, and in violation of 
China’s sovereignty. In Manchuria, Russia and Japan 
stationed railway guards on the Chinese Eastern Railway 
and the South Manchuria Railway, to which the Chinese 
Government has not given assent.”® Since 1909, Japan 
has stationed troops at consulates in such places as 
Liutowkow in Fengtien, and Yenki in Kirin, and since 
1911 Russia followed suit and put military guards at con- 
sulates in such places as Kirin and Yenki.’7 Upon the 
outbreak of the Chinese Revolution in 1911, Japan des- 
patched troops to Hankow, 800 miles up the Yangtze 
Valley and in the very heart of China, and has since 
constructed permanent barracks and maintained soldiers 
there, despite the repeated protests of the Chinese Gov- 
ernment. Upon the pretext of an unfortunate conflict 
in 1914 between the Chinese police operating against 
bandits at Liaoyuan on the border of Inner Mongolia, 
and a company of Japanese troops passing through the 
place, Japan despatched troops there, and notwithstand- 
ing the settlement of the case to the satisfaction of 
Japan, she has not yet withdrawn her military force. 
Shortly after the outbreak of the World War, Japan 
seized the Tsingtao-Tsinan Railway, and, stationing mili- 
tary guards along it, compelled the Chinese troops to 
withdraw from its vicinity, in spite of the repeated pro- 
tests of the Chinese Government and in gross violation 
of China’s sovereignty. At Kashgar in Sinkiang, Russia 
has, since 1900, maintanied 150 soldiers to protect the 
Russian postal agency, and Great Britain has, since 1918, 
maintained thirty Indian soldiers in the same city.78 


CONSULAR JURISDICTION 301 


Passing from this brief survey of the practice of extra- 
territoriality in China with the unwarranted practices 
under its zgis, we will now consider the recent changes 
and developments connected with extraterritorial juris- 
diction in China. On account of the declaration of war 
against Germany and Austria-Hungary in 1917, the 
treaties existing between the Central Powers and China 
have been abrogated, and with the abrogation the extra- 
territorial rights once enjoyed by the Germans and the 
Austrians have been duly extinguished. In the case of 
Russia, because of the Soviet revolution and the subse- 
quent collapse of the old régime, China has terminated 
all relations with that régime, by a presidential mandate 
of September 23, 1920,7° withdrawing recognition from 
the officials of the old régime and temporarily taking 
over the interests of Russia pending the eventual estab- 
lishment of a stable government there. During this in- 
terim, China is to act as trustee of all Russian interests 
in China, and the the extraterritorial rights hitherto en- 
joyed by the Russians remain as before. Special courts 
are instituted in China for the trial of cases involving 
Russians, and Russian counselors are to be employed 
to advise on the administration of justice in accordance 
with Russian laws. 


Having completed our discussion of the history and 
practice of extraterritoriality and consular jurisdiction in 
China, we will now deal with the defects and disadvan- 
tages of the system with a view to its eventual aboli- 
tion. Let it suffice to mention the main ones only. The 
first defect is the conflict of consular duties. As consul, 
he must protect and promote the interests of his na- 
tionals. As judge in extraterritorial cases, however, he 
is obliged to observe impartiality and administer jus- 
tice. Not infrequently, either because of bias or a pre- 
ponderance of duties as protector of his nationals’ in- 
terests, he fails to do justice. ‘Such a practice is obvi- 


302 IMPAIRMENTS OF SOVEREIGNTY 


ously contrary to the modern principle of the separation 
of administrative and judicial functions.” *° Further, 
consuls are frequently not well versed in law, and be- 
cause of this limitation in training are often unable to 
administer justice adequately. 

The second defect is the diversity of laws applied. The 
Chinese apply Chinese law; the British, British law; 
the French, French law; the American, American law. 
As a consequence, while the facts may be the same, the 
law applied is different and hence the decision varies, 
giving rise to the evils of judicial uncertainty and dis- 
parity of judgment and punishment.** 

The third defect is the lack of control over the plaintiff 
and the witness.. The jurisdiction being personal, the 
Court has control only over the defendant and the wit- 
ness of the defendant’s nationality. If, however, the 
plaintiff commits perjury or contempt of court, he cannot 
be proceeded against. Similarly, if the witness of a na- 
tionality different from that of the defendant should 
refuse to appear, or, after appearance, should refuse to 
testify or commit perjury or contempt of court, the judge 
would be powerless in these matters. On the other hand, 
should the defendant have a counter-claim or set-off 
against the plaintiff, no matter how valid it might be, 
the Court would have no jurisdiction over such cases, 
it not being permitted to entertain any suit brought against 
the plaintiff who is not of his nationality. In such cases, 
the defendant will have to resort to the plaintiff’s court 
for the adjudication of the counter-claim or set-off. 

The fourth defect is the difficulty in obtaining evidence 
for cases where the foreigner commits a crime in the inte- 
rior of China. In accordance with the treaty provision, 


“if he be without a passport, or if he commit any offense 
against the law, he shall be handed over to the nearest 
consul for punishment, but he must not be subjected to 
any ill-usage in excess of necessary restraint.” °? 


CONSULAR JURISDICTION 303 


“This rendered into plain language means that a for- 
eigner who commits a rape or murder a thousand miles 
from the seaboard is to be gently restrained, and remitted 
to a consul for trial, necessarily at a remote point, where 
testimony could hardly be obtained or ruled on.’ ®* In 
consequence of this arrangement a foreigner committting 
a crime in the interior is to be brought to the nearest 
consul who may be many miles away and the difficulty 
connected with obtaining evidence from thousands of 
miles away is often tremendous. 

The fifth disadvantage is that, under the present sys- 
tem of extra-territoriality, so long as it lasts, it is prac- 
tically impossible for the Chinese Government to open 
up the whole country for foreign trade and residence. 
For as long as foreigners carry extra-territorial immu- 
nity wherever they go or reside, the Chinese Government 
will be hampered in administration and protection. Thus, 
foreign trade will be limited to the treaty ports and the 
ports voluntarily opened by China, and cannot therefore 
grow as rapidly and extensively as otherwise. Put in 
another way, extra-territoriality is a real hindrance to 
the extension of foreign trade in China. 

In view of these serious defects and disadvantages, 
the abolition of extra-territorial jurisdiction has become 
a growing aspiration of the Chinese Government. Sev- 
eral Powers, on their part, have already consented to its 
relinquishment pending the judicial reform to be under- 
taken by China. Article 12 of the Mackay Treaty of 
1902 stipulated: 


“China having expressed a strong desire to reform 
her judicial system and bring it into accord with that of 
Western nations, Great Britain agrees to give every assist- 
ance to such reforms, and she will also be prepared to 
relinquish her extra-territorial rights when she is satis- 
fied that the state of Chinese laws, the arrangements for 
their administration, and other considerations warrant her 
in so doing.” °° 


304 IMPAIRMENTS OF SOVEREIGNTY 


Similar pledges are also found in Article 15 of the Sino- 
American Commercial Treaty of 1903,°° and in Article 11 
of the Sino-Japanese Commercial Treaty of the same 
year.% . 

The Chinese Government on its part has taken defi- 
nite steps toward its eventual abolition. On the one hand, 
it has refused to grant the privilege to the states recently 
seeking treaty relations. It has been reported that Greece, 
Poland, Jugo-Slavia and Czecho-Slovakia were given to 
understand that China, in view of judicial reforms re- 
cently undertaken or yet in process of adoption, would 
not henceforth concede any extra-territorial rights. 
On the other hand, China has manifested her desire for 
the abolition of extra-territoriality. At the Paris Peace 
Conference, the Chinese delegation submitted the request 
for the relinquishment of extra-territoriality and con- 
sular jurisdiction. The request was made that upon the 
fulfillment of the following two conditions which the 
Chinese Government pledged to fulfill by the end of 1924, 
the treaty powers would surrender their extra-territorial 
rights: 


“1. The proclamation of a Criminal, a Civil, and a 
Commercial Code, a Code of Civil Procedure, and 
a Code of Criminal Procedure. 

“2. The establishment of new courts in all the districts 
which once formed the chief districts of the old 
prefectural divisions, that is to say, in fact, in all 
the localities where foreigners reside.” °° 


Prior, however, to the abolition of extra-territorial 
jurisdiction, and to remedy some of the existing evils of 
the system, the Chinese delegation requested the imme- 
diate assent of the Powers to the two measures: 


“1. That every mixed case, civil or criminal, where the 
defendant or accused is a Chinese, be tried and 
adjudicated by Chinese courts without the presence 


CONSULAR JURISDICTION 305 


or interference of any consular officer or repre- 
sentative in the procedure or judgment. 

“2. That the warrant issued or judgments delivered 
by Chinese courts may be executed within the con- 
cessions or within the precincts of any building 
belonging to a foreigner, without preliminary ex- 
amination by any consular on foreign judicial 
aiticer.,\"* 


It is thus clear that the Chinese Government is deter- 
mined to abolish extra-territoriality and consular juris- 
diction in China, and that it is making every effort toward 
that end. It is also to be observed that the success of 
this measure will benefit not only China by restoring to 
her extra-territorial jurisdiction, but also the Powers by 
the opening of the whole of China to foreign trade and 
residence. 


NOTES TO CHAPTER XVIII 


1. Fiore’s International Law Codified, translated by E. M. 
Borchard, p. 208. 
iE, B. Moore, Internatl. Law Digest, ie 2 p. 593. 

Oppenheim, "Internat. Law, 3rd ed., Vol. 1, p. 606. 
Hertslet’s China Treaties, Vol. 1 No. 76, p. 438. 
Hertslet, ibid., No. 77, p. 445. 
Hertslet, ibid., Vol. 1, No. 78, p. 447. 
Hertslet, ibid., Vol. 1, No. 79, p. 451. 
Hertslet, ibid., Vol. 1, No. 81, p. 459. 
State Papers, Vol. 62, pp. 322-323, 

10. Hertslet, op. cit., Vol. 1, No. 62, p. 365. 

11. Hertslet, ibid., Vol. 14; No. 64, p. 379; State Papers, Vol. 
88, pp. 478- 479, Arts. 20, 21 and 22. 

12, Hertslet, ibid., Vol. 1, No. 37, p. 244; State Papers, Vol. 
92, p. 1049 et seq. 

13. J. B. Moore, Internatl. Law Dig., Vol. 2, p. 644. 

14. State Papers, Vol. 20, p. 256; Koo, The Status of Aliens 
in ‘ecko p. 95 et seq. 

Journal of House of Commons, Vol. 93, p. 476; Koo, op. 

a vn 112 a seq. 

16, Ibid., p. 112. 

17. State ee, Vol. 30, p. 398 et seq.; The Shantung Ques- 
tion, presented by the Chinese Peace Delegation to the Paris 
Peace Conference, 1919, published by the Chinese Natl. Welfare 


SO 19 NIV Unb G9 bY 


306 IMPAIRMENTS OF SOVEREIGNTY 


Soc., p. 92; Questions for Readjustment, submitted by China to 
the Peace Conference, App. 1, p. 35. 

18. State Papers, Vol. 30, pp. 401-402. 

19. Hertslet, op. cit., Vol. 1, No. 6, p. 18 et seq.; State Papers, 
Vol. 48, p. 47 et seq.; Questions for Readjustment, submitted by 
China to the Peace Conference, App. 1, p. 35. Also see Art. 17. 

20. State Papers, Vol. 32, p. 791 et seq. Arts. 21 and 25; 
Questions for Readjustment, p. 36, App. 2. t 

21. Hertslet, op. cit., Vol. 1, No. 39, p. 258 et seq.; Questions 
for Readjustment, p. 37, App. 3. 

22. Hertslet, Vol. 1, No. 93, p. 527 et seq. 


23. Hertslet, Vol. 1, No. 81, p. 455 et seq. 
24. Hertslet, Vol. 1, No. 56, p. 331 et seq. 
25. Hertslet, Vol. 1, No. 38, p. 249 et seq. 
26. Hertslet, Vol. 1, No. 70, p. 407 et seq. 
27. Hertslet, Vol. 1, No. 91, p. 512 et seq. 
28. Hertslet, Vol. 1, No. 34, p. 223 et seq. 
29. Hertslet, Vol. 1, No. 60, p. 354 et seq. 
30. Hertslet, Vol. 1, No. 33; p.'215 et seq. 
31. Hertslet, Vol. 1, No. 71, p. 415 et seq. 
32. Hertslet, Vol. 1, No. 35, p. 234 et seq. 
33. Hertslet, Vol. 1, No. 73, p. 423 et seq. 
34. Hertslet, Vol. 1, No. 64, p. 373 et seq. 


35. Hertslet, Vol. 1, No. 36, p. 240 et seq.: Article One pro- 
vides that “all privileges of person, property, and jurisdiction 
enjoyed by foreign nations under the Treaties concluded by 
China shall from henceforth be granted to the Congo Free 
State.” If the word “jurisdiction” as used herein means to 
include extraterritorial jurisdiction, then the privilege is herewith 
granted; otherwise it is not granted. 

36. Hertslet, Vol. 1, No. 69, p. 399. 

37. MacMurray, Treaties and Agreements With or Concern- 
ing China, 1908/11; State Papers, Vol. 101, p. 945 et seq. 

38. MacMurray, 1915/2. 

39. MacMurray, 1918/8. 

40. It is reported that Bolivia has recently entered into treaty 
relations with China. It is also reported that Greece, Jugo- 
Slavia, Czecho-Slovakia and Poland have made approach to the 
Chinese Government but have been given the understanding that 
China will not henceforth grant any extra-territorial jurisdiction. 
See H. K. Tong’s articles, Extra-Territoriality and the New 
Nations, Millard’s Review, Oct. 25, 1919, p. 314 et seq., and Has 
Extra-Territoriality Outlived Its Usefulness, Millard’s Review, 
Dec. 13, 1919, p. 56 et seq. 

_ 41. Koo, op. cit. p. 179. For a summary of extra-territorial 
jurisdiction, see W. W. Willoughby, Foreign Rights and Inter- 
ests in China, p. 23 et seq. 

42. Koo, op. cit., p. 195. 

43. Hertslet, Vol. 1, No. 6, p. 25, British Treaty of 1858, Art. 


21. 
44. China, 1914, No. 1, p. 46. 


CONSULAR JURISDICTION 307 


45. Oppenheim, Internati. Law, Vol. 1, 3rd Ed., p. 570. 

46. MacMurray, 1909/10. 

a Tyau, Treaty Obligations between China and Other States, 
Dp. 

48. The Case of Edward Page, U. S. For. Rel., 1881, p. 257; 
Koo, op. cit., pp. 194-195. 

49, Tyau, op. cit. p. 43. 

50. The Case of Genl. Burgevine, Dip. Cor., 1865, Vol. 2, 
462; Tyau, op. cit., pp. 43-44; U. S. Citizens in "Proposed Attach 
on Formosa, U. S. For. Rel., 1874, p 332. 

51. The Case of Chang Chine ease and Yu Kai-Ping, U. S. 
For. Rel., 1900, pp. 394-402. 

52. Hertslet, Vol. 1, No. 6, pp. 32-33, Art. 47, 48, 49, British 
Treaty of 1858. 

53. U. S. For. Rel., 1909, pp. 68-70; 1910, p. 839. 

54. The Case of the New Grenada Citizen, U. S. For. Rel., 
1873, Vol. 1, p. 139; the Case of Japanese Subjects during Chino- 
ein War, J. B. Morse, Internatl. Law Dig., Vol. 4, pp. 

-603. 

55. The Case of Japanese Hunting Regulations, U. S. For. 
Rel., 1874, p. 653; the Chinese Circular of 1878, the Tsungli 
Yamen to the Chinese Ministers Abroad, U. S. For. Rel., 1880-81, 
p. 178 

56. Sir John F. Davis to British Consuls in China, Nov. 22, 
_ 1844, Parliamentary Papers, 1847, XXXX, China, No. 795, p. 38; 
Koo, op. cit., p. 203; Case of Walter Jackson, U. S. For. Rel., 
1874, pp. 338, 347. 

SU AM Latter, The Government of the Foreigners in 
China, ae Law Quarterly Review, 1903, pp. 316-325; Koo, op. 
ert ip. 211; 

58. State Papers, Vol. 97, p. 150 et seq. 

59. 34 Statutes at Large, p. 814. 

60. Cf. W. W. Willoughby, op. cit. p. 35 et seq. 

61. W. W. Willoughby, ibid., p. 33 et seq. 

62. Seward, American Minister at Peking, to State Depart- 
ment, U. S. Foreign Relations, 1880, p. 146. 

63. Koo, op. cit., p. 217. 

64. W. W. Willoughby, op. cit., p. 46. 

65. Hinckley, American Consular Jurisdiction in the Orient, 
pp. 250-253; W. W. Willoughby, op. cit., p. 46 et seq. 

66. The Sino- Japanese Negotiations, 1915, p. 56. 

67. Art. 4, Sino-American Treaty, Nov. 17 1880, Hert., No. 
98, p. 562. 

68. Morse, Trade and Administration of China, p. 200. 

69. Morse, ibid., p. 200 et seq. 

70. The Proclamation of Counsellor Body, Nov. 10, 1911, 
W. W. Willoughby, op. cit., pp. 60-61. 

71. H. K. Tong, article on the Shanghai Mixed Court and the 
Settlement Extension, Millard’s Review, Nov. 15, 1919, p. 445. 

72. Minister Conger to Secretary: Hay US: For. Rel., 1902, 
Di geo saya, op. cit, p. 53. 


308 IMPAIRMENTS OF SOVEREIGNTY 


73. The Shantung Question, presented by China to the Paris 
Peace Conference, published by the Chinese Nat. Welfare So- 
ciety, 1920, p. 74. 

74. Aide Mémoire, Japanese Minister to the Chinese ae 
of Foreign Affairs, Oct. 18, 1916, MacMurray, 1917/2; W. W. 
Willoughby, op. cit., pp. 83 85, 

75. MacMurray, 1917/2: W. W. Willoughby, op. cit, p. 86; 
The Shantung Question, op. cit., p. 75. 

76. For a full statement of the case, see Questions for Read- 
justment, Submitted by China to the Peace Conference, p. 4 et 
seq. 

77. Questions for Readjustment, ibid., p. 6. 

78. For a full account of the foreieD troops in China, see 
Questions for Readjustment, ibid., pp. 

79. Millard’s Review, Oct. 9, 1920, pp. ee 


80. Questions for Readjustment, Op. cit., 16. 
AGA ne: Menil Case, U. S. For. Rel., 1909, ep 55-64; Tyau, op. 
Cit., DP. 00. 


ee Hertslet, Vol. 1, No. 6, p. 22, Article 9, British Treaty of 

88. Minister Read to Secretary Cass, 1859, Sen. Doc. No. 30, 
Vol. 10, 36th Congress, First Session, pp. 382, 384. 

89. Hertslet, Vol. 1, No. 28, p. 182. 

90. Hertslet, Vol. 1, No. 100, p. 575. 

91. Hertslet, Vol. 1, No. 66, pp. 386-387. 

92. H. K. Tong’s articles, Extra- -territoriality and New Na- 
tions, Millard’s Review, Oct. 25, 1919, p. 314 et seq.; Has Extra- 
territoriality Outlived Its Usefulness, Millard’s Review, Dec. 13, 
1919, p. 56 et seq. 

93. Questions for Readjustment, op. cit., p. 17. 

94. Ibid., p. 17. 


XIX 
CONCESSIONS AND SETTLEMENTS 


PassING from extra-territoriality and consular juris- 
diction, we now come to another form of impairment of 
China’s sovereignty, the foreign concessions and settle- 
ments. As these terms are often used interchangeably, 
it is not safe to attempt to distinguish them, and so 
suffice it to state that by concessions and settlements are 
meant the areas reserved for foreign residence where 
foreign communities, either through their consuls or 
their municipal councils, constitute self-governing bodies 
politic. 

The origin of concessions and settlements dates back 
to the opening to foreign trade and residence of the five 
parts at Canton, Amoy, Foochow, Ningpo, and Shanghai 
in 1842 and to the setting aside of certain reserved areas 
for foreign residence and trade as provided in the Sup- 
plementary Treaty of 1843 (Art. 7). 


“The Treaty of Perpetual Peace and Friendship pro- 
vides for British subjects and their families residing at 
the cities and towns of Canton, Foochow, Amoy, Ningpo, 
and Shanghai, without molestation or restraint. It is 
accordingly determined that ground and houses, the rent 
or price of which is to be fairly and equitably arranged 
for, according to rates prevailing amongst the people 
without exaction on either side, shall be set apart by 
the local officers in communication with the consul. . . .” 


The origin of local self-government dates back to the 
land regulations made by the treaty powers with a con- 
currence of the Chinese authorities. For instance, the 
land regulations of 1845 governing the Shanghai settle- 

309 


310 IMPAIRMENTS OF SOVEREIGNTY 


ment was made with the approval of the Chinese author- 
ity, and gave foreign renters the power and duty “to . 
build and repair the stone and wooden bridges, keep in 
order and cleanse the streets and roads, put up and light 
street lamps, establish fire engines, plant trees to protect 
the roads, open ditches to drain off the water, and hire 
watchman” (Art. 12).?_ In the Land Regulations of 1866- 
1869 governing the Foreign Settlements of Shanghai, 
north of Yangkingpang, the preamble read in part: 


“Whereas certain regulations ... were settled and 
agreed upon by the Representatives of England, France, 
and the United States of America, . . . in communica- 


tion with his Excellency Woo, the chief local authority 
representing the Chinese Government at Shanghai; ” 24 


And as concessions and settlements became recognized 
and established self-governing communities, treaty stipu- 
lations were provided. For instance, Article 1 of the 
protocol between China and Japan respecting Japanese 
settlements and other matters? reads: 


“It is agreed that settlements to be possessed exclu- 
sively by Japan shall be established at the towns and 
ports newly opened to trade. The management of roads 
and local police authority shall be vested solely in the 
Japanese consuls.” 


There are four kinds of concessions and settlements in 
China. The first is the concession. It is a reserved area 
granted in perpetual lease by the Chinese Government to 
the treaty power interested for the residence and trade 
of its nationals and with the delegated power to admin- 
ister the municipal government thereof, such as the con- 
cessions in Hankow and Tientsin. The second kind is 
the settlement. It is the reserved area set aside by the 
Chinese Government for the residence and trade of 
foreigners where they are permitted to organize them- 
selves into a municipality for self-government, but it is 


CONCESSIONS AND SETTLEMENTS © 311 


not a lease in perpetuity to the foreign Power concerned, 
such as the International Settlement of Shanghai. The 
third kind is the settlement in the ports voluntarily 
opened by China. It is an area set apart for interna- 
tional settlement where the municipal administration is 
still in the hands of the Chinese authorities. The fourth 
kind is the settlement by sufference. It is “one within 
which the residents have acquired without any formal 
agreement on the part of the territorial sovereign, the 
tacit right to govern themselves as a municipality,” + such 
as the settlement in Chefoo.® 


The local government in the concessions and settle- 
ment varies from the rule by the consul of the treaty 
power concerned as sole administrator to the government 
by a municipal council elected by the rate payers residing 
therein. In the Japanese, Belgian, and Italian concessions 
of Tientsin, the consul is the sole administrator.°7* In 
the French concession of Tientsin, the municipal control 
lies in a council composed of the consul as ex-officio 
president, and six land owners paying the highest taxes 
and three tenants paying the highest rents.®° In the 
British concession of Tientsin, the power is vested in the 
consul as de jure and ex-officio ruler, and in the munici- 
pal council elected by a vote of land renters. The British 
consul has the power of approval over all actions of the 
municipal council, presides over annual and special meet- 
ings, and has jurisdiction in all questions of landed prop- 
erty and in which “a non-British European is not 
defendant.” *° | 

In the International Settlement of Shanghai, the local 
government is based on the land regulations of 1866-1869 
as last amended and passed by the Foreign Ministers in 
Peking, which with certain modifications constitute the 
ruling charter of the Shanghai International settlement.*+ 
The government is vested in the municipal council con- 
sisting of not more than nine and no less than five coun- 


312 IMPAIRMENTS OF SOVEREIGNTY 


cilors elected annually by a popular vote of the foreign 
land renters and rate payers. ‘The electorate consists of 
every foreigner “having paid all taxes due, and being an 
owner of land of not less than 500 taels in value, whose 
annual payment of assessment on land, or houses, or 
both, exclusive of all payments in respect of licenses, 
shall amount to the sum of ten taels and upwards, or 
who shall be a householder paying on an assessed rental 
of not less than 500 taels per annum and upwards .. .” 
(Art. 19). The electorate meets at least once a year, 
and as often as necessary, at the notice of the consuls, to 
hear the reports of the past year, to consider the budget 
for the next year, and to authorize taxation and assess- 
ment (Art. 9). The municipal council is vested with 
the executive power of the municipality. It elects its 
own chairman and vice-chairman (Art. 21) and appoints 
committees out of its own members, “‘for all or any of 
the purposes wherein they were empowered to act” 
(Art. 23). The municipal council can be sued only 
through the “Court of Consuls” established at the be- 
ginning of each year by the whole body of treaty consuls 
Cae ay. 

The judicial power over foreigners is vested in extra- 
territorial consular courts, and the judicial power over 
the Chinese, or the mixed cases where the Chinese are 
defendants, is vested in the mixed courts. “No arrests 
can, as a general rule, be made except upon the warrant 
of the proper court, and in case of the mixed court 
countersigned by the Senior Consul. Since 1911 the 
execution of mixed court summons and warrants has been 
intrusted to the municipal police.” * 

The landholding in concessions and settlements, again, 
varies with different localities. In concessions, such as 
Hankow, foreigners obtain their titles to land from their 
consuls and must register their deeds with their own con- 
sulates.1* The Chinese are not supposed to hold land, 
but in practice they do so under the name of foreigners. 


CONCESSIONS AND SETTLEMENTS = 313 


In the international settlement of Shanghai foreigners 
must acquire the land from the original owner, taking 
from him the title deed and the tax receipts. Through 
their own consulates they must then apply to the Chinese 
land office for new title deeds. Three copies of the new 
title deed are required, one to be deposited with the con- 
sulate, one to be kept by the new owner, and one to be 
filed with the Chinese land office, whose seal gives the 
final validity. Further, they are not to acquire fee 
simple title deeds, but can hold land in perpetual leases. 
In the ports voluntarily opened by China, they must reg- 
ister their deeds with the Chinese authorities and are 
not allowed to acquire a lease for a term longer than 
thirty years.*® 


The legal status of concessions and settlements has 
become quite definite and determined. Although under 
the municipal control of the consul or the council, the 
area is still considered Chinese territory, over which 
China’s sovereignty remains unsurrendered. What for- 
eigners acquire thereby is the delegated power of mu- 
nicipal administratoin, while the reserved powers lie intact 
with the sovereign grantor. For example, it is stipu- 
lated : 2” 


“His Majesty the Emperor of China, being of the 
opinion that, in making concessions to the citizens or 
subjects of foreign Powers of the privilege of residing 
on certain tracts of land, or resorting to certain waters 
of that empire for purposes of trade, he has by no means 
relinquished his right of eminent domain or dominion 
over said land and waters, hereby agrees. ... It is 
further agreed that, if any right or interest in any tract 
of land in China has been or shall hereafter be granted 
by the Government of China to the United States or their 
citizens for purposes of trade or commerce, that grant 
shall in no event be construed to divest the Chinese au- 
thorities of their right of jurisdiction over persons and 


314. IMPAIRMENTS OF SOVEREIGNTY 


property within the said tract of land, except so far as 
that right may have been expressly relinquished by 
treaty.” 


Exercising the unsurrendered jurisdiction, the Chinese 
Government exacts an annual land tax on the concessions 
from the Powers; and collects land tax from foreigners 
holding real estate in the settlements. Again, as an ex- 
ercise of sovereignty, she maintains her judicial tribunals 
in the concessions and settlements. In the case of for- 
eigners, she delegated the power to the consuls by the 
grant of extra-territorial jurisdiction; in the case of 
Chinese, she establishes native courts or mixed courts for 
the trial of cases in which the Chinese are defendants. 

Again, as incident to her sovereignty, China reserves the 
power to declare neutrality of these concessions and set- 
tlements in time of war, allowing, however, the right of 
self-defense in case of a hostile attack. As an illustra- 
tion, it is provided: *® 

“.. . No such concession or grant shall be construed to 
give to any Power or party which may be at war or hos- 
tile to the United States the right to attack the citizens 
of the United States or their property within the said 
land or waters, and the United States, for themselves, 
hereby agree to abstain from offensively attacking the 
citizens or subjects of any Power or party or their prop- 
erty with which they may be at war on any such tract 
of land or waters of the said empire. But nothing in 
this Article shall be construed to prevent the United 
States from resisting any attack by any hostile Power or 
party upon their citizens or their property.” 


Further, as territorial sovereign, China may take what- 
ever measure regarding the concessions and settlements 
in time of war as are necessary for her own safety. She 
may close the ports for military necessity, whatever may 
be the number of foreign settlements and concessions 
located therein. To deny the territorial sovereign of this 


CONCESSIONS AND SETTLEMENTS | 315 


right of self-defense is to deny her of the right of inde- 
pendence and self-preservation. It is to be understood, 
however, that as soon as the military necessity has dis- 
appeared, closure, or any other measure of self-defense, 
must be forthwith removed. Thus, in the Sino-French 
War of 1885, China closed Canton where there were 
foreign settlements or concessions, which was acquiesced 
in by the Powers. Subsequently, after the war, the 
United States, while protesting against the delayed re- 
moval of the obstructions, nevertheless admitted the right 
of China to take due measures of self-defense. 


“It is unquestionable that a belligerent may, during 
the war, place obstructions in the channel of a belligerent 
port, for the purpose of excluding vessels of the other 
belligerent which seek the port either as hostile cruisers 
or as blockade-runners. . . . But while such is the law, 
it is equally settled by law of nations that when war ceases 
such obstructions . . . must be removed by the territorial 
authorities.” 1° 


Besides, because uf the unsurrendered sovereignty, the 
Chinese residing in the concessions and settlements are 
still under obligation to render allegiance to the Chinese 
Government. While in a limited sense they are under 
the jurisdiction of the municipal council or consul, in 
consequence of which they are not liable to arrest by 
Chinese authorities except with the consent of the consul 
or council, it is nevertheless decided that, except in the 
respects wherein China has by treaty or otherwise dele- 
gated her power of jurisdiction to the local government, 
they are still under the jurisdiction of the Chinese Gov- 
ernment. For instance, in 1862, the Shanghai taotai 
attempted to levy an impost upon the Chinese in the 
British settlement and asked the cooperation of the 
British consul. The latter refused to coOperate, but the 
British Minister repudiated the refusal and conceded the 
request, saying: 


316 IMPAIRMENTS OF SOVEREIGNTY 


“The Taotai is entitled to levy taxes as he pleases; 
and as long as he merely seeks to impose taxes on per- 
sons resident in the concession, which are paid by those 
in the city or suburb, I see no reason for objecting to it, 
at a time when it is our interest as well as that of the 
Chinese that the Government shall not be deprived of its 
resources.” 


This view was supported by Earl Russell, who added: 


“The lands situated within the limits of the British 
settlement are without doubt Chinese territory, and it 
cannot reasonably be held that the mere fact of a resi- 
dence within these limits exempts Chinese subjects from 
fulfilling their natural obligations.” 7° 


In addition, the grant being by lease or voluntary reser- 
vation for the residence and trade of foreigners, there is 
the implied condition or obligation on the part of for- 
eigners to use the settlements or concessions only under 
the condition of quiet enjoyment. Should the foreign 
communities at any time prove to be inimical to the 
welfare and safety of the sovereign grantor, the terri- 
torial sovereign can abate the nuisance or impose due 
restraint. To deny him this right is to deprive him, not 
only of the right of self-defense, but also the right 
of a landlord or territorial sovereign and to place the 
interest of the concessions and settlements above the 
paramount well-being of the territorial sovereign. 

Thus, in view of the unsurrendered sovereignty, and, 
to some extent, jurisdiction of China over the conces- 
sions and settlements, the observation can be ventured 
that the self-governing or independent municipalities 
located therein possess no more power than the mere 
delegation of purely local, corporate, and municipal pow- 
ers and functions. They are to attend to police, sani- 
tation, roads, and other local and administrative func- 
tions of a municipal government. But they are not politi- 


CONCESSIONS AND SETTLEMENTS © 317 


cal bodies, nor do they act as agents of the territorial 
sovereign, except when the territorial sovereign wishes 
to make them so. In short, their powers are delegated, 
and hence limited, and subject to strict construction; and 
are for local, corporate and municipal purposes, and not 
for political and governmental purposes. Supporting this 
view, the following instructions given by the foreign rep- 
resentatives at Peking, on Augut 6, 1863, to the rate 
payers of the Shanghai settlements clearly show the 
powers as well as the limitations of the municipal gov- 
ernment.?* 


“1. That whatever territorial authority is established 
shall be derived directly from the Chinese Gov- 
ernment, through the rate payers’ ministers. 

“2. That such shall not extend beyond simple munici- 
pal matters, roads, police, and taxes for municipal 
objects. 

“3. That the Chinese not actually in foreign employ, 
shall be wholly under the control of Chinese off- 
cers, aS much as in the Chinese city. 

“4. That each consul shall have the government and 
control of his own people, as now; the municipal 
authority simply arresting offenders against the 
public peace, handing them over, and prosecuting 
them before their respective authorities, Chinese, 
and others, as the case may be. 

“5. There shall be a Chinese element in the municipal 
system, to whom reference shall be made, and as- 
sent obtained to any measure affecting the Chinese 
residents.” 


Recent developments in regard to the concessions and 
settlements also deserve our attention. Upon the sever- 
ance of diplomatic relation with Germany on March 14, 
1917, the Chinese Government availed itself of the oppor- 
tunity and took over the German concessions in Tientsin 
and Hankow. Two weeks later, on March 28, 1917, the 
Ministry of the Interior communicated to the Ministry of 


318 IMPAIRMENTS OF SOVEREIGNTY 


Foreign Affairs the rules of procedure governing the as- 
sumption of control of the German concessions.” The 
concessions were recognized as special areas, and Bureaux 
for the Provisional Administration of the Special Areas 
were created. A Chief of Bureau was appointed for 
each of the special areas on the recommendation of the 
Ministry of Interior, “to control police and other admin- 
istrative affairs therein and also to carry out police and 
other administrative measures” (Art. 1). The original 
municipal council of the area was, under the direction 
of Chief of the Bureau, to deal with all matters pertain- 
ing to self-government, but “resolutions passed at a rate 
payers’ meeting of the municipality shall not be enforced 
without the approval of the chief of the Bureau” (Art. 2). 

Simultaneously with the declaration of war on Ger- 
many and Austria-Hungary on August 14, 1917, the 
Government Gagette (August 14, 1917) promulgated the 
regulations governing the Bureaux for the municipal 
administration of the German concessions at Tientsin and 
Hankow and the Austrian concessions at Tientsin.?* The 
Provisional Bureaux were changed to Bureaux for the 
municipal administration of the special areas. Each 
bureau is to have a chief, who, under the supervision 
of the Governor of the province, attends to the police 
and administrative functions of the municipality. The 
matters relating to foreign relations, however, are to be 
dealt with in conjunction with the special commissioner 
of foreign affairs for the province (Art. 1). ‘Regula- 
tions promulgated by the chief of the Bureau must be 
submitted by the Governor to the Ministry of the Inte- 
rior for approval” (Art. 4). Thus, it is to be observed 
that the recovered concessions are placed under the rule 
of the Municipal Bureaux for the Special Areas, which 
in turn are under the direction of the Ministry of the 
Interior. 

Further, as China terminated all relations with the 
old Czar régime of Russia by the Presidential mandate 


CONCESSIONS AND SETTLEMENTS 319 


of September 23, 1920,?4 and as she did not extend her 
recognition to soviet Russia, she likewise availed herself 
of the opportunity and took over the Russian concessions. 
The Chinese commissioner for foreign affairs takes the 
place of the Russian consul in the municipal government, 
but the municipal council is to remain as before. That 
is, the municipal government of the Russian concessions 
remains as of old, with the exception that the Chinese 
commissioner for foreign affairs steps into the shoes of 
the Russian consuls. “The existing administrations,” 
stated the Waichiaopu, “will be maintained with the mu- 
nicipal councils functioning as heretofore. It is not the 
intention of the Chinese Government to alter the status 
of the concessions, Chinese control amounting only to 
the commissioner of foreign affairs taking the place of 
the Russian consul (as Chairman of the Municipal Coun- 
cil), that is to say, the powers and privileges formerly 
exercised by the Russian consul will be transferred to 
the Commission of Foreign Affairs. . . . The main ques- 
tion, that of the continued functioning of the Municipal 
Councils, has never been in doubt.” 7 It is thus seen that 
the policy is to take over the control of the Russian con- 
cessions, only as a trustee, pending the establishment of 
a stable government in Russia which will be recognized 
by China and the other Powers. “The Government con- 
tinues to emphasize that there will be as little interfer- 
ence as possible with the present administrations of those 
concessions, and that it is merely acting as a trustee on 
behalf of a future Russian Government recognized by 
China and the other Powers with which China was re- 
cently associated in war.” 7° 


We cannot conclude this discussion without pointing 
out the advantages and disadvantages of the concessions 
and settlements with a view to their eventual restoration 
to China. It must be observed that they have been in 
some ways beneficial to the Chinese people. First, they 


320 IMPAIRMENTS OF SOVEREIGNTY 


have supplied an example to the Chinese as to how to 
administer a municipal government which will promote 
the welfare and happiness of the inhabitants. Situated 
as they are at the door of the Chinese nation, they are, 
in many cases, real object lessons to the Chinese people 
in municipal administration. Second, they have been not 
infrequently the zones of safety for the common people 
suffering from internal disorders. For example, during 
the Taiping Rebellion, thousands of Chinese flocked to 
the Shanghai settlements for safety. Again, in the recent 
disorders during and following the Revolution of 1911, 
they have often served as fortresses of Chinese life, 
liberty and property. 

Despite these advantages, their existence results in 
serious disadvantage to the Chinese Government, and, 
in some ways, to the Chinese people. First, while the 
Chinese constitute the bulk of the inhabitants and con- 
tribute by far the largest share of the revenue of these 
municipalities, they are yet denied the right of representa- 
tion in the municipal council. This is generally so, with 
the sole exception of the Kulangsoo International Settle- 
ment, where the municipal council has a Chinese delegate 
appointed by the local Chinese authority. In the Shang- 
hai International Settlement, the Chinese composing 
ninety-five per cent of the residents, have no representa- 
tion whatever in the municipal council, but are only 
granted the privilege of having an advisory committee 
elected annually by the Chinese commercial bodies.?7 It 
is not unreasonable to state that the existing situation is 
tantamount to taxation without representation. 

Second, while China has never surrendered her sov- 
ereignty, and has only granted or delegated the powers of 
municipal government for local and corporate purposes, 
and not for political and governmental, her sovereignty 
is much impaired and infringed, and her administration is 
much obstructed by the practices and claims of the con- 
cessions and settlements. The Chinese residing therein 


CONCESSIONS AND SETTLEMENTS 321 


cannot be arrested except with the consent of the consul, 
or in the case of the Shanghai International Settlement, 
of the senior consul; and in the case of Chinese connected 
with foreign firms, consent must be obtained of the con- 
sul of the Power to whose nationality the firm belongs. 
Chinese fugitives from justice cannot be arrested save 
with the concurrence of the authorities of the concessions 
or settlements. Chinese residents, even when no foreign 
interests are involved, must be tried in the mixed court. 

In the case of the Shanghai International Settlement, 
the foreign assessor not only attends the proceedings, 
but virtually acts as judge, trying and deciding the case. 
Though parts of Chinese territory, Chinese troops are 
not permitted to pass through these concessions or settle- 
ments. “This assertion of exclusive authority and the 
power has made each concession virtually ‘un petit état 
dans l’état’ to the impairment of China’s rights as terri- 
torial sovereign.” 7° 


In view of these serious disadvantages, the Chinese 
Government, through its delegation at the Paris Peace 
Conference, declared its desire for the restoration of the 
foreign concessions and settlements.?® It proposed that 
the powers should enter into negotiations with China for 
the return of these areas, and, to obviate the objections 
of vested interests, it further suggested that the restora- 
tion should take place “at the end of five years from 
the date of such arrangement.” 

Before the consummation of the measure, however, 
the Chinese Government proposed four immediate changes 
in order to remove certain unsatisfactory features in con- 
nection with the foreign concessions and settlements, as 
follows: 


“1. The Chinese citizens shall have the right to own 
land in all the concessions and settlements under the 
same conditions as foreigners; 


322 IMPAIRMENTS OF SOVEREIGNTY 


2. That Chinese citizens residing in the concessions 
shall have the right to vote in the election of members 
of the municipal councils and to be elected thereto ; 

3. That warrants issued and judgments delivered by 
competent Chinese courts outside the concessions shall 
be executed in the concessions, without being subject to 
any revision whatsoever by the foreign authorities ; 

4. That in no foreign concessions shall a foreign as- 
sessor be allowed to take part in the trial or decision of 
cases wherein Chinese citizens alone are concerned.” *° 


It is manifest that the Chinese Government is deter- 
mined to recover these concessions and settlements. To 
this end, on the one hand, it has recovered the German 
and Austrian concessions, and has also temporarily taken 
over the control of the Russian concessions pending the 
coming negotiations with the recognized government of 
Russia. On the other hand, it has expressed its earnest 
desire to recover the other foreign concessions and settle- 
ments as manifested in the claims made public at the 
Paris Peace Conference. It is hoped that the rapid 
progress of the Chinese Government in municipal ad- 
ministration will soon secure the restoration and recovery 
of the foreign concessions and settlements, so that this 
phase of the impairment of China’s sovereignty may be 
remedied. 


NOTES TO CHAPTER XIX 


1. State Papers, Vol. 31, p. 132 et seq 

2. Land Regulations, 1845, North China Herald, Jan. 17, 1852, 
quoted in E. S. Tai, Treaty Ports in China, p. 12. 

2A. State Papers, Vol. 90, p. 974; also see Art. 28, p. 986. 

3. Hertslet’s China Treaties, Vol. 1, No. 65, pp. 382. 383. 

f i Tyau, Treaty Obligations Between China and Other States, 
Pp. 

5. Morse, The Trade and Administration of China, p. 221. 

6,:7./8. Ibid, DAZI7: 

9. Ibid, D. 216. 

10. ‘Thid., p. 216. 


CONCESSIONS AND SETTLEMENTS 323 


11. State Papers, Vol. 90, 1898, p. 970 et seq.; Hertslet, op. 
cit., Vol. 2, No. 130, p. 664 et seq. 

12. How Shanghai Is Governed, address by Mr. E. C. Pearce, 
former Chairman of the Shanghai Municipal Council, before 
Shanghai League at the Royal Asiatic Society Hall on October 
26, 1920, published in Millard’s Review, Oct. 30, 1920, pp. 444-446. 

13. W. W. Willoughby, Foreign Rights and Interests in China, 
p. 209; Land Regulations of the British Concession at Hankow, 
May, 1902, Hertslet, Vol. 2, No. 149, p. 789 et seq. 

14. W. W. Willoughby, op. cit., p. 210. 

15. Ibid, p. 210; Land Regulations, 1869, Hertslet, Vol. 2, No. 
130, p. 664 et seq., Articles 2, 3, 4, 5. 

16. W. W. Willoughby, op. cit., p. 209. 

17. Additional articles to the Treaty of Commerce Between 
the United States and China, June 18, 1885, signed at Washing- 
ton, July 28, 1868, Hertslet, Vol. 1, No. 96, p. 554 et seq., Art. 1. 

18. Hertslet, Vol. 1, No. 96, pp. 554-555, Article 1. 

19. U. S. Foreign Relations, 1886, p. 95, Mr. Bayard to Mr. 
Denby, July 28, 1886. 

20. China, 1864, No. 3, pp. 10-11, Enclosure 5 in No. 4, Mr. 
Bruce to Consul Medhurst, Nov. 5, 1862; No. 61, Earl Russel 
to Sir F. Bruce, April 8, 1863; Tyau, op. cit., pp. 61-62. 

21. The Shantung Question submitted by the Chinese Peace 
- Delegation to the Paris Peace Conference, 1919, published by the 
Chinese National Welfare Society, 1920, p. 84; China, 1864, No. 
oop. 146-7Tyat) op. cit.) p. 60. 

22. MacMurray, 1917/7. 

23. MacMurray, 1917/7. 

24. Millard’s Review, Oct. 9, 1920, pp. 281-282. 

25. H. K: Tong, article on The New Development of the 
SUA Situation, Millard’s Review, Oct. 9, 1920, pp. 281, 

26. Ibid. 

27. The Shantung Question, op. cit., p. 83. 

28. Ibid., p. 84. 

29. Ibid., pp. 83-86. 

30. Ibid., p. 86. 


XX 
LEASED TERRITORIES 


More detrimental to the sovereignty of China than con- 
cessions and settlements are leased territories. They are 
usually naval bases forcibly arrested from China by the 
great Powers in the general scramble for concessions and 
leases in 1898. They have virtually become independent 
principalities located at the strategic points of China’s 
coast. 

By leased territories are meant the areas leased to the 
foreign Powers for a fixed term of years, during which 
period the Chinese Government withholds the exercise of 
her jurisdiction over these areas, and instead the juris- 
diction of the lessee state is substituted. They are like 
concessions and settlements in that they are still Chinese 
territories and that they derive their just powers from 
the grant of the territorial sovereign, but they are unlike 
concessions and settlements in that they exercise, not 
only the proprietary and municipal powers, but also politi- 
cal and governmental jurisdiction. 


; 
It is needless to narrate in detail the origin of the 
leased territories. Suffice it to reiterate that they are 
the direct consequences of the general scramble for 
leases and concessions in 1898. It will be remembered 
that Germany, using the murder of two German 
Catholic priests in Shantung as a pretext, seized Kiao- 
chow and acquired its lease for ninety-nine years by the 
convention of March 6, 1898.1 
On the very same day on which the German lease was 
concluded, Russia demanded the lease of Port Arthur 
and Talienwan and obtained the same by the Treaty of 
324 


LEASED TERRITORIES 325 


March 27, 1898,? for a period of ninety-nine years. Im- 
pelled by the necessity of preserving the balance of 
power, Great Britain secured the lease of Kowloon, op- 
posite Hongkong,’? on June 9, 1898, including Deep Bay 
and Mirs Bay for a term of ninty-nine years, and the 
lease of Weihaiwei, on July 1, 1898, “for so long a 
period as Port Arthur shall remain in the occupation of 
Russia.” # 

Subsequent changes in the control of the leased terri- 
tories also deserve our notice. As we all know, by the 
Russo-Japanese War, Japan succeeded to Russia in the 
lease of Port Arthur and Talienwan by the treaty of 
Portsmouth (September 5, 1905),5 and later obtained 
China’s consent to the transfer by the Agreement of De- 
cember 22, 1905.5“ To reiterate what has been said, as the 
original Russia lease was only for twenty-five years, she 
obtained its extension to ninety-nine years by the Treaty 
of May 25, 1915, relating to South Manchuria and East- 
ern Inner Mongolia.* Again, during the World War, 
she succeeded to Germany in Kiaochow and Shantung.”* 


The concession of leased territories generally consist 
of a strategic base, a neutral zone, and jurisdiction over 
the territories in question. The first earmark of a leased 
territory is the strategic base, which is often vested with 
the right of fortification. In the Kiaochow lease conven- 
tion, this provision was found (Article 2).° 


“.. His Majesty the Emperor of China cedes to 
Germany on lease, provisionally for 99 years, both sides 
of the entrance to the Bay of Kiaochow. Germany en- 
gages to construct, at a suitable moment, on the terri- 
tory thus ceded, fortifications for the protection of the 
buildings to be constructed there and of the entrance to 
the harbor.” 


In the lease of Port Arthur and Talienwan, it is stipu- 
lated: 


326 IMPAIRMENTS OF SOVEREIGNTY 


“The governments of the two countries agree that, as 
Port Arthur is solely a naval port, only Russia and 
Chinese vessels are to be allowed to use it, and it is to 
be considered a closed port as far as the war and mer- 
chant vessels of the other Powers are concerned” (Ar- 
ticle 6) .°4 


Again, in the French lease of Kwangchowwan, it is de- 
clared : 


“Te Gouvernement Chinois, en raison de son Amitié 
pour la France, a donné a bail pour 99 ans Kouang-Tche- 
ououan au Gouvernement francais pour, y etabir une 
station navale avec dépot de charbon,—(Article 1). La 
France pourra élever des fortifications, faire tenir gar- 
rison a des troupes ou prendre toute autre mesure de- 
fensive dans le terrain loué” (Article 4).*° 


Similarly, in the lease of Kowloon the preamble reads: 


“whereas it has for many years past been recognized that 
an extension of Hongkong territory is necessary for 
proper defense and protection of the Colony.” ™ 


It is further provided that the area so leased should in- 
clude the waters. of Mirs Bay and Deep Bay, probably 
strategically necessary for the safety of Hongkong. 
Finally, in the lease of Weihaiwei it is stated: 


“His Majesty the Emperor of China agreed to lease 
to the Government of Her Majesty the Queen of Great 
Britain and Ireland, Weihaiwei, in the Province of Shan- 
tung, and the adjacent waters. . . . Great Britain shall 
have in addition the right to erect fortifications, station 
troops, or take any other measures necessary for defen- 
sive purposesi’.” 10:7? 7? 


Thus, the leased territories are obtained primarily as 
strategic bases with the right of fortification. 
The second earmark of the leased territories is the 


LEASED TERRITORIES 327 


neutral zone. It is established largely for the protection 
of the strategic base. In Kiaochow a neutral zone of fifty 
kilometers surrounding the Bay at high water was demar- 
cated, within which China engaged to permit the free 
passage of German troops and “to place no obstacle in 
the way of any regulation of the water courses which may 
prove to be necessary.” She also engaged not to issue 
any ordinances or take any other measures or station 
troops without previous consent of the German Govern- 
ment (Article 1).7° In the Russian lease of Port Arthur 
and Talienwan, a neutral zone was likewise provided 
CArtooy: 


“To the north of the territory leased there shall be 
left a piece of territory, the extent of which is to be 
arranged by Hsu Ta-Jén and the Russian Foreign Office. 
This piece is to be entirely left to the Chinese officials, 
but no Chinese troops are to enter it except after ar- 
rangement with the Russian officials.” 1°“ 


In the French lease of Kwangchowwan, while there 
was no specific mention or provision of a neutral zone, 
the demarcation of the leased territory was so made as 
to include a large area surrounding the Bay of Kwang- 
chowwan, which, for all practical purposes, took the 
place of a neutral zone.** Similarly, in the lease of Kow- 
loon, although there no neutral zone was provided, the 
extension, or rather the lease itself, extended so far into 
the interior as to create a small buffer area which served 
the purpose of affording protection to Hongkong, just as 
the neutral zone would to Kiaochow or Port Arthur and 
Talienwan. Again, in the lease of Weihaiwei, instead of 
a neutral zone, a belt of land ten English miles wide 
along the entire coast line of the Bay of Waihaiwai and 
under the sole jurisdiction of Great Britain was conceded, 
which was tantamount to the neutral zone, if not better. 
In short, the leased territories, whose primary purpose is 
the intrenchment of the Powers concerned in their re- 


328 IMPAIRMENTS OF SOVEREIGNTY 


spective strategic naval and military bases, are surrounded 
either by a neutral zone, or by a belt of land under the sole 
jurisdiction of the foreign Power in question of suff- 
cient width and length for the protection of the strategic 
bases. 

The third earmark of the leased territories is the exclu- 
sive jurisdiction of the foreign Powers concerned over 
the leased areas. During the term of the lease, China 
engages to suspend the exercise of her jurisdiction, and 
exclusive jurisdiction of the foreign Powers is substi- 
tuted. The Kiaochow lease convention had this provision: 


“In order to avoid the possibility of conflicts, the Im- 
perial Chinese Government will abstain from exercising 
rights of sovereignty in the ceded territory during the 
term of the lease, and leave the exercise of the same to 
CSETMANVi). pious KALE ho de 
The Russian lease of Port Arthur and Talienwan pro- 
vided (Art. 4): 


“Within the term fixed, in the territory leased to Rus- 
sia, and in the adjacent waters, all movements of forces, 
whether naval or military, and the appointment of high 
officials to govern the districts, shall be entirely left to 
Russian officers... .” 


The French lease of _Kwangchowwan states: 


“Le territoire sera gouverné et administré pendant les 
99 ans de bail par la France seule, cela afin d’éviter tout 
froissement possible entre les deux pays” (Art. 3). 


The lease of Kowloon stipulates that 


“Within the city of Kowloon the Chinese officials now 
stationed there shall continue to exercise jurisdiction 
except so far as may be inconsistent with the military 
requirement for the defense of Hongkong. Within the 


LEASED TERRITORIES 329 


remainder of the newly leased territory Great Britain 
shall have sole jurisdiction.” (On account of the re- 
sistance of the natives of Kowloon to the entrance into, 
and assumption of the control of, the city of Kowloon, 
Chinese jurisdiction was discontinued on May 16, 1899) .*° 


Finally the lease of Waihaiwai contains practically the 
same stipulation, respecting jurisdiction and administra- 
tion. 

In consequence of this grant of exclusive jurisdiction 
during the term of the lease, Chinese troops are not 
permitted to pass except with the consent of the lessee 
state. For instance, in the Russian lease of Port Arthur 
and Talienwan the stipulation was found (Art. 9): 


“No Chinese troops of any kind whatever are to be 
allowed to be stationed within this boundary.” 


Fugitives from justice have to be extradited as if from 
a foreign jurisdiction (Art. 6).1° The Chinese customs 
are relinquished and removed to the frontiers of the 
leased territories. 


“As regards the reéstablishment of Chinese customs 
stations which formerly existed outside the ceded terri- 
tory but within the 50 kilometer zone, the Imperial Ger- 
man Government intends to come to an agreement with 
the Chinese Government for the definite regulation of 
the customs frontier, and the mode of collecting duties” 27 
(Article 5). 


Chinese residents are placed under the protection of 
the foreign governments concerned and must observe the 
established law and order.*® 

In fact, so complete is this grant of jurisdiction that 
even the foreign nationals enjoying extraterritorial 
rights, upon entrance into the leased territories, lose their 
extraterritorial privileges and must submit themselves to 
the jurisdiction of the lessee state.1® This position was 


330 IMPAIRMENTS OF SOVEREIGNTY 


accepted by all the Powers, except Japan, who, however, 
after supplanting Russia in Port Arthur and Talienwan, 
also changed her position. Supporting this view, John 
Hay said:?° 


“.. The intention and effect of China’s foreign 
leases having apparently been the relinquishment by China 
during the term of the leases and the conferment upon 
the foreign power of all jurisdiction over the territory, 
such relinquishment and transfer of jurisdiction was seen 
to involve the loss by the United States of its right to 
exercise extraterritorial consular jurisdiction in the terri- 
tories so leased, while, as you remark, as these territories 
have practically passed into the control of peoples whose 
jurisdiction and method are akin to our own, there would 
seem to be no substantial reason for claiming the con- 
tinuance of such jurisdiction during the foreign occu- 
pancy or tenure of the leased territory.” 


On the other hand, notwithstanding the grant of ex- 
clusive jurisdiction, China’s sovereignty over the leased 
territories during the term of the lease is in no way sur- 
rendered or waived. In fact, this was clearly stipulated 
in some leases and in the others partially recognized. 


“His Majesty the Emperor of China, .. . engages, 
while reserving to himself all rights of sovereignty in a 
zone of 50 kilometers (100 Chinese li) surrounding the 
Bay of Kiaowchow at high water, to permit the free 
passage of German troops within this zone at any 
tinea 


“This act of lease, however, in no way violates the 
sovereign rights of His Majesty the Emperor of China to 
the above-mentioned territory.” *? 


In the convention for the lease of Kowloon and Wai- 
haiwai, however, there is no mention of the reservation 
of China’s sovereignty, but the civil jurisdiction within 


LEASED TERRITORIES 331 


the city of Kowloon and Waihaiwai was reserved to 
the Chinese authorities, “except so far as may be in- 
consistent with the naval and military requirements for 
the defense of the territory leased.” ”° 

Again, the sovereignty of China is affirmed by the 
reservations regarding China’s special right of naviga- 
tion in the leased waters. With the exception of Kiao- 
chow, where the Chinese ships were treated like those 
of other nations, the other leased waters gave them spe- 
cial privileges. Port Arthur, being a closed port, ad- 
mitted only Russian and Chinese vessels. 

In the waters of Mirs Bay and Deep Bay, 


“Tt is agreed that Chinese vessels of war, whether neu- 
tral or otherwise, shall retain the right to use these 
waters.” 


_ The same right is reserved in the lease of Waihaiwai. In 
the Bay of Kwangchowwan, however, the Chinese ves- 
sels enjoy the privilege only on condition of neutrality: 


“Le mouillage en eau profonde le plus voisin de ce 
point d’abontissement (eaux territoriales) sere exclusive- 
ment reserve aux navires de querre francais et chinois, 
ces derniers en situation de neutralité seulement” (Art. 


8). 


Further, the sovereignty of China is recognized by the 
fact that the lease, without the consent of China, is un- 
transferable. The lessee state possesses no right to let, 
or sublet, or transfer, or alienate the lease in any form 
to any other foreign Power without the express con- 
sent of the territorial sovereign who grants it. In the 
Kiaochow lease, it was specifically stipulated : 


“Germany engages at no time to sublet the territory 
leased from China to another Power.” *4 


332. IMPAIRMENTS OF SOVEREIGNTY 


In the other leases, there is no such express prohibi- 
tion, but the precedent set by the transfer of Port Arthur 
and Talienwan to Japan in 1905, with the consent of 
China, indicates conclusively that, in the absence of ex- 
press stipulation, the consent of the territorial sovereign 
is essential to the validity of the transfer. Thus, in the 
treaty of Portsmouth, it was provided: 


“The Imperial Government of Russia cede to the Im- 
perial Government of Japan, with the consent of the Gov- 
ernment of China, the lease of Port Arthur, of Talien- 
wan, and the territories and adjacent territorial waters, 


9 


“The two high contracting parties mutually engage to 
obtain from the Government of China the consent men- 
tioned in the above stipulation.” 7° 


In pursuance of this stipulation, on December 22, 1905, 
Japan obtained the consent of China: 


“The Imperial Chinese Government consent to all the 
transfers and assignments made by Russia to Japan by 
Articles 5 and 6 of the Treaty of Peace above mentioned” 
CATT) ie? 


And the fact that the grant is personal to the grantee 
and made in derogation of China’s sovereignty further 
renders the transference, without the consent of China, 
unthinkable and unjustifiable. 

Besides, the sovereignty of China can also be proved 
by virtue of the implied conditions or covenants which 
must be included in the leases. The lessee states are to 
enjoy their privileges of tenancy only on good behavior 
and quiet enjoyment; and should the lessee states prove 
themselves to be nuisances or menaces to the welfare 
and safety of the territorial sovereign or other neighbor- 
ing states, the territorial sovereign who granted the lease 
would have the right to abate the nuisance or to eliminate 


LEASED TERRITORIES 333 


the menace. Further, the lessee states must restore, at 
the expiration of the leases, the leased territories “in as 
good a condition, allowing for reasonable wear and tear, 
as when the latter first conveyed it to him;” 27 and should 
the territories, on restoration, prove to be deteriorated or 
impaired in any way, due to the negligence of the lessee 
states to keep them in repair, the territorial sovereign 
would be entitled to due compensation or indemnity. 

In addition, as incident to her sovereignty, China re- 
tains the right to declare the neutrality of the leased 
territory. As long as her sovereignty over the areas in 
question is retained, so long is she entitled to place them 
under the protection of her neutrality. On the other 
hand, in exercising the right of neutrality, she at the 
same time assumes the responsibility to see that strict 
neutrality is observed by the lessee state in the leased 
areas. While conceding the right of self-defense, as 
otherwise the lessee state would not be able to restore 
the leased territories, she nevertheless requires that, in 
time of a war between the lessee states and other states, 
the lessee state must observe neutrality in the leased areas 
and retain the territories only on condition of quiet en- 
joyment. Should the lessee Power make the leased area 
a belligerent base of action, thus menacing the rights of 
other belligerents and thereby violating the neutrality of 
the area, the territorial sovereign would be obliged to en- 
force strict neutrality by either prohibiting the belligerent 
activities of the lessee state or by abating the nuisances 
and removing the sources of menace, thus fulfilling her 
own responsibility arising from the status of neutrality. 
If, however, she should fail to do so, the other belliger- 
ent states interested could lodge protests and require 
the territorial sovereign to restrain or remove the nuisance 
or menace, but if the menace should prove to be “instant, 
overwhelming, leaving no choice of means, and no time 
for deliberation,” ** then the belligerent Powers concerned 
might abate the nuisance or remove the menace them- 


334 IMPAIRMENTS OF SOVEREIGNTY 


selves. In this case the rights of the territorial sovereign 
remain unimpaired, and the eventual disposal of the 
leased area requires the sanction of the territorial sover- 
eign. 


We now come to the disadvantages of the leased terri- 
tories with a view to their restitution to China. First, 
these leased territories, located as they are at strategic 
points, weaken and hamper the national defense of China. 
By their continued existence, they deprive her of her best 
military and naval bsaes, which cannot but contribute 
materially to the relative military weakness of the nation. 
Besides, in a war between the lessee state and China, they 
will be used inevitably by the lessee state as a base of 
action against her, thus threatening the very safety and 
integrity of the territorial sovereign. Second, being stra- 
tegic points with fortifications, they are likely to become 
the objects of struggle in a war, wherein the lessee state 
is a party. Thus war is brought to Chinese territory, 
although she may not be a party thereto. In the Russo- 
Japanese War, the great battles were fought around Port 
Arthur, although China was technically a neutral. Fur- 
ther, in the event of their occupation by the other Powers 
in consequence of war, they would become a source of 
complication to China. As an outcome of the Russian 
defeat in the Russo-Japanese War, China had to consent 
to the transfer of Port Arthur and Talienwan to Japan. 
Recently, as a result of the capture of Kiaochow by 
Japan, China was again involved in a controversy with 
Japan, which has as yet not been settled. 

Hence, for the sake of self-defense and self-preserva- 
tion, the Chinese Government, through her delegation at 
the Paris Peace Conference, made known its earnest de- 
sire for the restitution of these leased territories. “As 
the prolongation of the foreign control over the leased 
territories constitutes a continued lordship, whose in- 
jurious effects tend from day to day to increase, the 


LEASED TERRITORIES 335 


Chinese Government feel in duty bound to ask for the 
restitution of these territories, with the assurance that, 
in making this proposal, they are conscious of, and are 
prepared to undertake, such obligations as the relinquish- 
ment of control may equitably entail on them as regards 
the protection of the rights of property owners therein 
and the administration of the territories thus restored to 
the complete control of China.” ?° 


NOTES TO CHAPTER XX 


1. Hertslet’s China Treaties, Vol. 1, No. 59, pp. 350-354; 
vide supra, chapter on The International Struggle for Con- 
cessions. 

2. Hertslet, Vol. 1, No. 88, pp. 505-508. (3a) Hertslet, No. 55, 
pp. 329-331; the Shantung Question, presented by China to the 
Paris ears Conf., pub. by the Chinese Nat. Welfare Society, 
1920, p 

3. Pic Vol. 1, No. 24, p. 120. 

- 4, Hertslet, Vol. rp No. 25, Dia hees 

5. State Papers, Vol. 98, pp. 734-740; MacMurray, 1905/8. 

5A. Hertslet, Vol. 1, No. 67, pp. 391-396. 

6. MacMurray, 1915/8. 

7. MacMurray, 1915/8; The Chino-Japanese Negotiations, 
1915, p. 49 et seq. 

8. The Chino-Japanese Negotiations, 1915, p. 53. 

9. Hertslet, Vol. 1, No. 59, p. 351. 

9A. Hertslet, Vol. 1, No. 88, pp. 506-507. 

10. Hertslet, Vol. 1, No. 55, p. 329 et seq. 

nl. Hertslet, Vol. i No. 24, p. 120. 

12. Hertslet, Vol. 1, No. 25, p. 122. 

13. By the Convention of Nov. 28, 1905, Germany withdrew her 
troops from Kiaochow and Kaomi, The Shantung Question, 
App., No. 3 to Vol. 2, pp. 54-66. 

13A. In the additional agreement between China and Russia 
respecting the boundaries of Port Arthur and Talienwan, May 
7, 1898, the boundary of the leased territory was defined (Art. 1) 
and the neutral zone was provided as follows: (Art. 2) “To the 
north of the boundary fixed in Article 1, there shall, in accord- 
ance with Article 5 of the Peking Treaty, be a neutral ground, 
the northern boundary of which shall commence on the west 
coast of Liaotung at the mouth of the Kaichow River, shall 
pass north of Yu-Yen-Ch’ang to the Ta-Yang River, and shall 
follow the left bank of that river to its mouth, which shall be 
Sears in the neutral territory.”—Hertslet, Vol. 1, No. 89, pp. 


336 IMPAIRMENTS OF SOVEREIGNTY 


14. Hertslet, Vol. 1, No. 55, p. 329, Art. 2. 

15. North China Herald, Apr. 24, May 22, 1899, cf. Morse, 
The International Relations of the Chinese Empire, Vol. 3, p. 120. 

16. Hertslet, Vol. 1, No. 55, p. 330. 

17. Hertslet, Vol. 1, No. 59, p. 353. 

18; Hertslet, Vol. 1, No. 55, p. 330, Art. 3. 

19. J. B. Moore, Internatl. Law Digest, Vol. 2, p. 639. 

20. U. S. For. Rel., 1900, p. 387, ff. Sec. Hay to Amer. Min- 
ister at Peking. 

21. Hertslet, Vol. 1, No. 59, p. 351, Art. 1, the Kiaochow 
Lease Convention. 

22. MacMurray, 1898/5, Art. 1. The Lease of Port Arthur 
and Talienwan; also see Art. 1, Kwangchowwan Lease, Hertslet, 
VoleL WNoli55,) p. 329, 

23. Hertslet,, Vol. 1, No. 25, p. 123. On account of local 
resistance, however, the Chinese jurisdiction was expelled from 
Kowloon on May 16, 1899. 

24. Hertslet, Vol. 1, No. 59, p. 352, Art. 5. 

25. State Papers, Vol. 98, pp. 736-737, Art. 5. 

26. State Papers, Vol. 98, p. 741, Treaty and Supplementary 
Agreement, Dec. 22, 1905. 

A Tyau, Treaty Obligations between China and Other States, 
p. 70. 

28. The Case of Caroline, Moore, op. cit., Vol. 2, p. 412. 

29. Questions for Readjustment, Submitted by China to the 
Peace Conference, p. 21. 


XXI 
SPHERES OF INFLUENCE OR INTEREST 


STILL another form of the impairment of China’s sov- 
ereignty is the sphere of influence, or the sphere of inter- 
est. These two terms have been used interchangeably, but 
some distinction may be made between them. Spheres of 
influence generally carry a political significance, while 
spheres of interest usually connote preferential economic 
exploitation. ‘The technical meaning of the term sphere 
of interest is an area or territory within which a nation 
claims the primary right of exploitation of commercial 
and natural resources. The term sphere of influence is 
by some thought to refer to a certain degree of political 
control, however slight it may be... .”? 

Bearing in mind the distinction, it can be observed 
that the sphere of influence or interest as claimed by 
the Powers in China are nothing more than spheres of 
interest, wherein the claimant Powers maintain priority 
in economic exploitation, and oppose the inroads of other 
foreign influences. They are portions of territory 
“wherein a nation expressly or impliedly declares that 
it will permit no other nation to exert political influence, 
and that itself will lead in exploitation of natural re- 
sources.” ? 


It is unnecessary to narrate the origin of the spheres of 
interest in China. In a former chapter on the Interna- 
tional Struggle for Concessions, the story has been told, 
—how Germany first created her sphere of interest in 
Shantung by the seizure of Kiaochow and the subsequent 
Convention of March 6, 1898;*% how Russia followed 
suit and established her sphere of influence in Manchuria 

337 


338 IMPAIRMENTS OF SOVEREIGNTY 


and Liaotung by the occupation of Port Arthur and 
Talienwan and the Convention of March 27, 1898;* how 
France obtained her sphere of interest in Yunnan, 
Kwangsi and Kwangtung; how Great Britain won the 
recognition of her sphere of interest in the Yangtze Val- 
ley and Tibet; and, finally, how Japan extended her 
influence over Fukien. 

We should, however, point out the later developments 
which deserve attention. In consequence of the Russo- 
Japanese War, Japan succeeded to Russia in South Man- 
churia and Liaotung as her sphere of interest, while Rus- 
sia retained North Manchuria as her sphere. By the 
agreements of 1907, 1910, and 1916, while there was no 
specific mention as to any division of sphere of influence, 
it was generally understood, at least from subsequent ac- 
tions,® that Russia regarded North Manchuria and Outer 
Mongolia as her sphere of interest, and Japan South 
Manchuria and Eastern Inner Mongolia. Again, taking 
advantage of the World War, Japan ousted Germany 
from Shantung and established herself as successor, 
which was confirmed by Articles 156, 157 and 158 of 
the Treaty of Peace with Germany signed at Versailles 
on June 28, 1919. Finally, in view of the temporary 
retreat of the Russian influence in North Manchuria and 
Outer Mongolia in consequence of the Soviet Revolution, 
Japan has made repeated endeavors to acquire this Rus- 
sian sphere of interest.® 

Thus, as a result of the elimination of the German and 
possibly the Russian sphere of influence, and the propor- 
tionate expansion of the Japanese sphere, it can be said 
that there exist in China to-day only three spheres,—the 
French sphere in the Three Provinces bordering on Ton- 
kin, the British sphere in the Yangtze Valley and Tibet, 
and the Japanese sphere in Fukien, Shantung, South Man- 
churia and Eastern Inner Mongolia, and possibly also 
in North Manchuria and Outer Mongolia. A report has 
been made, which, however, has not yet been substan- 


SPHERES OF INFLUENCE OR INTEREST 339 


tiated, that these three Powers entered into a tripartite 
agreement at the Paris Peace Conference as to their re- 
spective spheres of influence in the wiiole of Asia. Those 
regions which concern China are as follows: 


British sphere: Tibet, Szechuan, the Kwangtung region 
forming the littoral of Canton and equal commercial 
rights in the Yangtze Valley; 

French sphere: Yunnan, Kwangsi, Kweichou and 
Western Kwangtung ; 

Japanese sphere: All of China, except the regions 
above mentioned, and Mongolia.® 


Whatever may be said as to the authenticity of the report, 
the fact remains that there are to-day existing in China 
only three spheres of interest—those of France, Great 
Britain and Japan,—and that Japan occupies the most 
important, if not the lion’s share, of these spheres. 


Having considered the origin and the recent develop- 
ments, we now come to the characteristic features of the 
spheres of interest in China. The first feature is the 
strategic base, such as Kiaochow, Port Arthur, Kwang- 
chowwan and Waihaiwai. While appertaining mainly 
to the leased territories, they serve, nevertheless, as 
points d’appui for the entire spheres of interest which 
are generally adjacent thereto. That is to say, they be- 
come the bases of action, alike as the bases of the eco- 
nomic exploitation which must be carried on within the 
spheres and as the bases of military defense for their 
preservation. 

The second feature is the railway. In order to ex- 
ploit the natural resources and to dominate the economic 
life of the spheres, the Powers interested projected rail- 
ways into them. Germany constructed the Tsingtao- 
Tsinan Railway, which was seized by Japan in 1914; 
Russia built the Chinese Eastern Railway, the southern 
portion of which from Changchun to Dalny and Port 


340 IMPAIRMENTS OF SOVEREIGNTY 


Arthur was transferred to Japan in consequence of the 
Russo-Japanese War in 1905; France constructed the 
Tongkin-Yunnanfu line, and Great Britain built the 
Shanghai-Nanking, the Shanghai-Hangchow-Ningpo and 
the Canton-Kowloon railways. The distinction must be 
pointed out, however, that while the other Powers 
adopted a more or less exclusive policy, Great Britain 
has, on several occasions, shared the railway concessions 
in the Yangtze Valley with the other Powers, the 
Tientsin-Pukow Railway with Germany, the Pukow- 
Sinyang with France, and the Hukuang with France, 
Germany and the United States. 

The third feature is the claim or right of priority or 
first option in loans and concessions. Expressly or tacitly, 
the Powers claiming spheres of influence assert their 
prior rights, particularly with respect to railways and 
mines within their respective spheres. In the Kiaochow 
lease convention this was stipulated, besides the privi- 
lege of mining rights within ten miles of the Tsingtao- 
Tsinan Railway.’ 


“If within the Province of Shantung any matters are 
undertaken for which foreign assistance, whether in per- 
sonnel, or in capital, or in material, is invited, China 
agrees that the German merchants concerned shall first 
be asked whether they wish to undertake the works and 
provide the materials. In case the German merchants 
do not wish to undertake the said works and provide the 
materials, then as a matter of fairness China will be free 
to make such other arrangements as suit her conven- 
C3 (el ain 


This right of first option is now inherited by Japan by 
virtue of Article 156 of the Treaty of Peace with Ger- 
many of 1919, which reads: 


“Germany renounces in favor of Japan all rights, 
title and privileges,—particularly those concerning the 


._ SPHERES OF INFLUENCE OR INTEREST 341 


territory of Kiaochow, railways, mines and submarine 
cables,—which she acquired in virtue of the Treaty con- 
cluded by her with China on March 6, 1898, and of all 
other arrangements relative to the Province of Shantung.” 


On September 26, 1914,° France received a pledge from 
the Chinese Foreign Office giving preference to French 
nationals in railway and mining enterprises in the Prov- 
ince of Kwangsi. In an exchange of notes annexed to 
the Treaties of May 25, 1915,1° Japan obtained first option 
in railway loans in South Manchuria and Eastern Inner 
Mongolia. In the Treaty with Outer Mongolia of Sep- 
tember 30, 1914,74 Russia obligated her not to grant any 
railway concessions without first consulting Russia. 

The fourth feature leading to spheres of influence is 
the declaration of non-alienation. Practically in all re- 
gions, the Powers interested made China declare that she 
would not alienate in any way the regions in which they 
were interested. Thus, France obtained the declaration 
of non-alienation regarding the Island of Hainan on 
March 15, 1897,'? and of the provinces bordering on Ton- 
kin on April 10, 1898.13 Great Britain procured a simi- 
lar declaration respecting the Island of Chusan,* and 
Munglem and Kiang Hung.*®* She also received the same 
pledge regarding the Yangtze Valley: 


“The Yamen have to observe that the Yangtze region 
is of the greatest importance as concerning the whole po- 
sition (or interests) of China, and it is out of the ques- 
tion that a territory (in it) should be mortgaged, leased, 
or ceded to another Power.” 7° , 


She obtained from Tibet through the Treaty of Septem- 
ber 7, 1904,17 a pledge that British consent must first 
be obtained before making territorial concessions to other 
foreign Powers (Art. 9a), which was subsequently rec- 
ognized by China in the Treaty of April 27, 1906.18 

In the tripartite agreement between Russia, China and 


342. IMPAIRMENTS OF SOVEREIGNTY 


Outer Mongolia, the latter was to have no right to 
conclude any international treaty with foreign Powers 
respecting political and territorial questions (Art. 3), 
regarding which the Chinese Government should be obli- 
gated to come to an agreement with the Russian Gov- 
ernment through negotiation in which the authorities of 
Outer Mongolia should participate (Art. 3), which is 
tantamount to, and inclusive of, the declaration of non- 
alienation respecting Outer Mongolia. In 1898 Japan 
obtained the declaration of non-alienation respecting 
Fukien.1® In an exchange of notes annexed to the 
Treaty of May 25, 1915, respecting Shantung,?? Japan 
was assured of the non-alienation of that Province. 
Among the now celebrated Twenty-one Demands, Japan 
demanded the non-alienation of China’s coast (Group 
IV).7* This was finally changed to a voluntary pro- 
nouncement by China to that effect.?? 

The fifth and last feature which, like the previous one, 
is also a method of establishing or safeguarding the 
sphere of interest is the international agreement between 
the Powers interested pledging to respect the spheres per- 
taining to each. On January 15, 1896, Great Britain and 
France agreed that they would make Yunnan and 
Szechuan their common sphere of influence, rendering 
common to both Powers all privileges and advantages 
that China might grant to either of them (Art. 4): 


“The two Governments agree that all commercial and 
other privileges and advantages conceded in the two 
Chinese provinces of Yunnan and Szechuan either to 
Great Britain or to France, in virtue of their respective 
Conventions with China of the Ist March, 1894, and 
the 20th of June, 1895, and all the privileges and advan- 
tages of any nature which may in the future be conceded 
in these two Chinese provinces, whether to Great Britain 
or France, shall, as far as rests with them, be extended 
and rendered common to both Powers and to their na- 
tionals and dependents, and they engage to use their 


SPHERES OF INFLUENCE OR INTEREST 343 


influence and good offices with the Chinese Government 
for this purpose.” ?° 


On September 2, 1898, Great Britain and Germany 
covenanted to define and respect their spheres of interest 
for applications for railway concessions: 


“1.—The British sphere of interest, viz—the Yantze 
Valley, subject to the connection of the Shantung lines 
to the Yangtze at Chinkiang: the provinces south of the 
Yangtze, the Province of Shansi with connection to the 
Peking-Hankow line at a point south of Chengting and 
a connecting line to the Yangtze Valley, crossing the 
Hoangho Valley. 

“2.—German sphere of interest, viz—the Province 
of Shantung and the Hoangho Valley with connection to 
Tientsin and Chengting, or other points of the Peking- 
Hankow line, in the south with connection to the Yangtze 
at Chinkiang or Nanking. The Hoangho Valley is un- 
_ derstood to be subject to the connecting lines in Shansi 
forming part of the British sphere of interest, and to 
the connecting line to the Yangtze Valley, also belonging 
to the said sphere of interest.” *4 


As a further recognition of the German sphere of 
interest, in connection with the occupation of Weihaiwei, 
Great Britain declared to Germany: 


“that in establishing herself at Weihaiwei, she has no 
intention of injuring or contesting the rights and inter- 
ests of Germany in the Province of Shantung, or of 
creating difficulties for her in the Province of Shantung. 
It is especially understood that England will not construct 
any railway communication from Weihaiwei and the 
district leased therewith into the interior of the Province 
of Shantung.” * 


On April 28, 1899, Great Britain and Russia engaged 
to define and respect each other’s sphere of interest. 
Russia was to have the region north of the Great Wall 


344. IMPAIRMENTS OF SOVEREIGNTY 


as her sphere of interest, and Great Britain the Yangtze 
Valley: 


“1. Great Britain engages not to seek for her: own 
account, or on behalf of British subjects or of others, 
any railway concessions to the north of the Great Wall 
of China, and not to obstruct, directly or indirectly, appli- 
cations for railway concessions in that region supported 
by the Russian Government. 

“2. Russia, on her part, engages not to seek for her 
own account, or on behalf of Russian subjects or of 
others, any railway concessions in the basin of the 
Yangtze, and not to obstruct, directly or indirectly, appli- 
cations for railway concessions in that region supported 
by the British Government.” *° 


Similarly, on June 10, 1907, Japan and France engaged 
to support each other “in the regions of the Chinese Em- 
pire adjacent to the territories where they have rights 
of sovereignty, protection or occupation.” *7 On July 30 
of the same year, Japan and Russia covenanted “to sus- 
tain and defend the maintenance of the status quo,” 
which, rendered into ordinary language, means to respect 
the spheres of interest pertaining to each.2* On July 4, 
1910, Japan and Russia again entered into an agreement, 
this time not only to maintain the status quo, but also 
to take common measure against external menace 
(Art. 3).2° Finally, on July 3, 1916, Japan and Russia 
entered into two covenants, an open convention and a 
secret treaty, the latter a secret alliance.*° 


We now come to the legal status of the spheres of 
interest. It is to be understood that these spheres are 
not recognized in international law. Postulating the prin- 
ciple of territorial sovereignty as supreme and exclusive 
in each state, international law does not admit the valid- 
ity of spheres of interest, except by virtue of treaty 
stipulations and international agreements. Like extra- 


SPHERES OF INFLUENCE OR INTEREST 345 


territorial jurisdiction, they come into existence and be- 
come recognized, not because of any principle of inter- 
national law, but rather by virtue of the consent of the 
territorial sovereign as provided in treaty stipulations and 
of the international agreements entered into by the Pow- 
ers between themselves. Hence, whatever rights the 
Powers interested have in their respective spheres are 
limited to the treaty stipulations. “It cannot be irrele- 
vant to remark that ‘sphere of influence’ and the theory 
or practice of the ‘Hinterland’ idea are things unknown 
to international law and do not as yet rest upon any 
recognized principles of either international or municipal 
law. They are new departures which certain great Euro- 
pean Powers have found necessary and convenient in 
the course of their division among themselves of great 
tracts of the continent of Africa and which find their 
sanction solely in their reciprocal stipulations.” ** 
Further, the declarations of non-alienation made to the 
various Powers concerning the different spheres do not 
confer any rights on the Powers concerned, save prob- 
ably the right to protest in case China should violate 
her own declaration. These declarations do not in any 
way earmark these spheres for the eventual control or 
annexation by the Powers concerned. They still remain 
Chinese territory, full and complete. Even should con- 
trol or annexation prove to be necessary, it would have 
to be done through treaty stipulations. Thus, these decla- 
rations do not detract from the territorial sovereign any 
iota of his prerogatives and rights, except the right of 
alienating the regions concerned. If they should have 
any effect it must be in relation to a third Power. They 
will probably preclude the other Powers from obtaining 
similar special positions in these spheres. In case of 
a break up of China, which was imminent when the 
spheres were created in 1898, but which has become a 
thing of the past since the Chinese Revolution of 1911, 
the Powers in whose favor the declaration of non- 


346 IMPAIRMENTS OF SOVEREIGNTY 


alienation was made, and especially those who have fur- 
ther diligently safeguarded their spheres by international 
agreements, will have preémptions as to the respective 
spheres. “The assurance merely signifies that, if events 
should arise in the remote future which may compel 
him (the territorial sovereign) to choose between the 
claims of different states, those of the state in whose 
favor the declaration has been made will be respected 
to the exclusion of all others.” *? 


We cannot conclude this subject without pointing out 
the serious disadvantages of the spheres of interest in 
China with a view to their eventual renunciation or abo- 
lition. First, the spheres of interest constitute a serious 
hindrance to the economic development of China. As 
the Powers dominate these spheres, China cannot de- 
velop her natural resources, if she needs foreign capital, 
as freely as she pleases, but generally she must always 
give the first option to the Powers claiming the spheres. 
This virtually gives a monopoly to the foreign Powers 
in question, particularly with respect to foreign loans. 
This naturally results in restraint of trade, in interfer- 
ence with the natural operation of the economic law of 
supply and demand, and in infringement of China’s lib- 
erty of action. What is worse, “there have been several 
instances of one nation or another who was unable her- 
self to supply the necessary capital or the proper men 
for a particular enterprise in a region it claims for its 
sphere of influence or interest and yet who refused to 
allow the enterprise either financed or carried out by 
other nations who could supply both the money and the 
men, ° 

Second, these spheres of interest vitiate the principle 
of equal opportunity of trade. The Powers dominating 
the regions generally possess preferential or exclusive 
rights, which preclude the possibility of competition on 
an equal basis. The Powers in question often so en- 


SPHERES OF INFLUENCE OR INTEREST 347 


trench themselves in their various spheres of interest, 
gathering into their hands all the basic industries and 
means of communication, that they become the dominant 
economic Power in the spheres, rendering equal oppor- 
tunity of trade practically non-existent. 

Third, and worst of all, the spheres of interest menace 
the well-being of the nations and hence of the world. 
They tend to build up in China rival economic kingdoms, 
competing with one another for supremacy and aggran- 
dizement. Thus, they not only grind down the integrity 
and independence of China in the mills of their economic 
imperialism and struggle, but induce among themselves 
antagonism and hatred, giving rise to international fric- 
tion and possibly to war. 

In view of these serious disadvantages, the Chinese 
Government, through its Peace delegation at the Paris 
Conference, asked for the renunciation on the part of 
the Powers concerned of their claims to spheres of in- 
terest in China and the revision of treaties in consequence 
of such renunciation. 


“The Chinese Government hope that the interested 
Powers will, out of their sincere regard for the sover- 
eign rights of China and the common interests of all 
nations having trade relations with her, make a declara- 
tion, each for itself, to the effect that they have not any 
sphere of influence or interest in the Republic of China, 
nor intend to claim any; and that they are prepared to 
undertake a revision of such treaties, agreements, notes 
or contracts previously concluded with her as have con- 
ferred, or may be construed to have conferred, on them, 
respectively, reserved territorial advantages or peferen- 
tial rights or privileges to create spheres of influence or 
interest impairing the sovereign rights of China.” ** 


The request failed ; but in its place a new champion has 
arisen that is liable to demolish the economic barriers 
erected by the institution of spheres of interest. That 


348 IMPAIRMENTS OF SOVEREIGNTY 


is the New International Banking Consortium. While 
paying due respect to vested interests, it proposes to pool 
all options of the Powers and the concessions in which 
no substantial headway has as yet been made.* The 
significance of this measure cannot be overestimated. It 
means that the Powers joining the Corsortium surrender 
their prior claims or rights to first options in all the loans 
that come within the scope of the New Consortium and 
that it chooses to undertake. Thus, the New Consortium 
obliterates one of the leading features of the spheres of 
interest—the right of first option or the claim of pri- 
ority. This likewise indicates that while permitting the 
economic dykes as erected by the spheres of interest to 
remain intact, the New Consortium puts an injunction 
on any further walls of exclusion that tend to block the 
common interests of the Powers as well as China’s eco- ~ 
nomic development. Moreover, in pooling options and 
concessions in railways, the New Consortium tacitly and 
impliedly introduces the principle and practice of the 
internationalization of Chinese railways. When mate- 
rialized, this will have the salutary effect of establishing 
royal roads of freedom running through several spheres 
of interest and of promoting the untrammeled economic 
development of China and the general well-being of the 
Powers concerned. Thus, the New Consortium, incar- 
nating as it does the Open Door doctrine, is the antidote 
and demolisher of the spheres of interest. 


NOTES (FO CHAPTER A 


Reinsch, World Politics, p. 113. 
Ibid., p. 114. 
Hertslet’s China Treaties, Vol. 1, No. 59, pp. 350-354. 

4, Hertslet, Vol. 1, No. 88, pp. 505-508. 

5. Russia made Outer Mongolia a buffer state and herself 
joint suzerain of the same in 1913 and 1915 (MacMurray, 
1913/11 and 1915/10) ; also see chapter on the Policy of Russia 
in China. Japan’s 21 Demands in 1915 covered only South 


ios 


SPHERES OF INFLUENCE OR INTEREST 349 


Manchuria and Eastern Inner Mongolia. See chapter on The 
Policy of Paramount Influence and on The Twenty-one Demands 
as an Exponent of Japan’s Policies in China. 

6. Vide supra, chapter on The Policy of Paramount Influence. 

6A. Millard, China’s Case at the Peace Conference, Millard’s 
Review, Supp., July 17, 1920, p. 18. 

/. Hertslet, Vol. 1, No. 59, D. 1305, DEC. 2,-ATt 4, 

8. The Shantung Question, submitted by China to the Paris 
Peace Conference, published by the Chinese National Welfare 
Society of America, 1920, App. No. 1 to Vol. 2, p. 50. 

9. MacMurray, 1895/5. 

10. MacMurray, 1915/8. 

11. MacMurray, 1914/12. 

12. MacMurray, 1897/2. 

13. MacMurray, 1898/6. 

i Hertslet, Vol. 1, No. 4, p. 16. Art. 3, Convention of April 
4, 1846. 

15. Art. 5, Convention between Great Britain and China rela- 
tive to Burma and China, March 1, 1894, Hertslet, Vol. 1, No. 
20, p. 104; also Art. 5, Agreement between Great Britain and 
China modifying the Convention of March 1, 1894, relative to 
Burma and China, Feb. 4, 1897, Hertslet, Vol. 1, No. 22, p. 116. 

16. Hertslet, Vol. 1, No. 23, p. 120, The Tsungli Yamen to 
Sir C. MacDonald, Feb. 11, 1898. 

17. MacMurray, 1906/2. 

18. MacMurray, 1906/2. 

19. MacMurray, 1898/8. 

20. MacMurray, 1915/8. 

21. The Chino-Japanese Negotiations, the Official Chinese 
Statement, 1915, p. 21; China Year Book, 1919, p. 567. 

22. The Chino-Japanese Negotiations, 1915, p. 28. 

235i oy 1896/1; Millard, Our Eastern Question, App. 
V, pp. 515, 516 

"24. MacMurray, 1900/5; Millard, op. cit, App. I, p. 444. 

25. Hertslet, Vol. 1, No. 102, p. 584, Exchange of Notes be- 
tween Great Britain and Germany respecting the British Occu- 
pation of Weihaiwei, April 20, 1898. 

26. Hertslet, Vol. 1, No. 104, pp. 586-587; Russia and Great 
Britain, on August 31, 1907, again mutually pledged to abstain 
from any interference or extension of influence in Tibet.— 
Hertslet, Vol. 1, No. 121, pp. 620-622. 

But when Russia moved on Outer Mongolia in 1913 and 1915, 
Great Britain made the similar counter move.—Vide supra, chap- 
ter on the Policy of Great Britain in China. 

27. MacMurray, 1907/7; Millard, op. cit., App. M., pp. 457-458. 

28. MacMurray, 1907/11; Millard, ibid., ‘App. D, p. 424. 

29. MacMurray, 1910/1. 

30. MacMurray, 1916/9. 

31. U. S. For. Rel., 1896, pp. 232, 235, Mr. Olney, Secretary 
of State, to Sir Julian Pauncefote, British Ambassador, June 22, 
1896; J. B. Moore, Internatl. Law ‘Dig, Vol. 1, pp. 268-269, 


350 IMPAIRMENTS OF SOVEREIGNTY 
32. Tyau, Treaty Obligations between China and Other States, 


p. 90. 

33. The Shantung Question, op. cit., p. 71. 

34. Ibid., p. 71. 

35. The United States Government proposed . . . that not 
only future options that might be granted but concessions held 
by individual banking groups in which substantial progress had 
not been made, should, so far as feasible, be pooled with the 
Consortium; that working on these two principles, the operations 
of the Consortium would serve to prevent for the future the 
setting up of special spheres of influence in the Continent of 
Asia.—Thomas W. Lamont, Preliminary Report on the New 
Consortium for China, pp. 6-7. 


XXIT 
THE MOST FAVORED NATION TREATMENT 


ANOTHER form of the impairment of China’s sover- 
eignty is the operation or rather the abuse of the most 
favored nation clause. It was originally conceived in 
a spirit to preserve the equality of treatment in her rela- 
tions with foreign states, but in actual practice, it has 
become a fruitful source of embarrassment and restraint, 
resulting in the infringement of her sovereignty. 

By the most favored nation treatment is meant that 
whatever privileges, favors or immunities, with respect 
to commerce and navigation, granted to a given state, 
shall be granted to others also. This places the states 
on a footing of equality so far as the privileges, favors 
and immunities in matters regarding commerce and navi- 
gation are concerned. This further rules out any ex- 
clusive or discriminating rights in commerce and navi- 
gation that the territorial sovereign may grant. It like- 
wise creates a community of interest among foreign 
states, inasmuch as the privileges, favors or immunities, 
An relation to commerce and navigation, granted to one, 
are, ipso facto, regarded as granted to all enjoying the 
most favored nation treatment. 

The origin of this most favored nation clause goes back 
to the supplementary treaty signed between Great Britain 
and China in Hoomun-Chae, on October 8, 1843, follow- 
ing the Treaty of Nanking, August 29, 1842. It was 
stipulated (Art. 8) :? 


“The Emperor of China having been graciously pleased 
to grant to all foreign countries whose subjects or citi- 
zens have hitherto traded at Canton, the privilege of re- 

351 


352. IMPAIRMENTS OF SOVEREIGNTY 


sorting for purposes of trade to the other four ports of 
Foochowfoo, Amoy, Ningpo and Shanghai on the same 
terms as the English, it is further agreed, that should 
the Emperor hereafter, from any cause whatever, be 
pleased to grant additional privileges or immunities to 
any of the subjects or citizens of such foreign countries, 
the same privileges and immunities will be extended to, 
and enjoyed by, British subjects; but it is to be under- 
stood, that demands or requests are not on this plea to 
be unnecessarily brought forward.” 


In the Treaty of Peace, Amity and Commerce, between 
the United States and China, signed at Wanghia, July 
3, 1844,? the most favored nation treatment was found 
CArto2): 


“Citizens of the United States ... shall in no case 
be subject to other or higher duties than are or shall be 
required of the people of any other nation whatever .. . 
and if additional advantages or privileges of whatever 
description, be conceded hereafter by China to any other 
nation, the United States, and the citizens thereof, shall 
be entitled thereupon to a complete equal and impartial 
participation in the same.” 


In the Treaty of Whampoa with France, October 24, 
1844,? similar most favored nation treatment was granted 
(Arts. 6 and 35). Thus in practically all the subse- 
quent treaties of commerce, the most favored nation 
clause was found. 


Now there are several forms of the most favored 
nation provision in the Chinese treaties. The first is 
the unilateral and unqualified form. That is to say, it 
provides for unconditional most favored nation treatment 
by China without at the same time including the reciprocal 
engagement of the Powers in question to render the same 
privileges in return to China or her citizens. For in- 
stance: 


«ef 


THE MOST FAVORED TREATMENT = 353 


“The British Government and its subjects are hereby 
confirmed in all privileges, immunities, and advantages 
conferred on them by previous treaties: and it is hereby 
expressly stipulated that the British Government and its 
subjects will be allowed free and equal participation in 
all privileges, immunities, and advantages that may have 
been, or may be hereafter, granted by His Majesty the 
Emperor of China to the Government or subjects of any 
other nation” (Art. 54).4 


In fact, this provision proved to be so efficacious that 
when Japan, having defeated China in 1895, made the 
Treaty of Commerce on July 21, 1896, the same provision, 
mutatis mutandis, was repeated (Art. 25).° Again, in 
the French Treaty of Tientsin, June 27, 1858, it was spe- 
cifically stipulated that the French, while enjoying the 
most favored nation treatment, were, nevertheless, not 
subject to obligations not expressly provided in the 
convention: 


“Il est dailleurs entendu que toute obligation non con- 
signée expressément dans la présente Convention ne 
saura €tre imposee aux Consuls ou aux Agents Consu- 
laires, non plus qu’a leurs nationaux, tandis que, comme 
il a été stipulé, les Francais jouiront de tous les droits, 
privileges, immunites et garanties quelconques qui au- 
raient ete ou qui seraient accordes par le Gouvernement 
Chinois a d’autres Puissances’” (Art. 40).° 


The second form is the reciprocal, which means that 
not only China, but also the other contracting party 
undertakes identical obligations. In other words, it is 
bilateral and reciprocal, and not unilateral. For example: 


“The contracting parties agree that the Government, 
public officers, and citizens of the Republic of Peru shall 
fully and equally participate in all privileges, rights, im- 
munities, jurisdiction, and advantages that may have been, 
or may be hereafter, granted by His Majesty the Em- 


354 IMPAIRMENTS OF SOVEREIGNTY 


peror of China to the Government, public officers, citi- 
zens or subjects of any other nation. 

“In like manner, the Government, public officers, and 
subjects of the Empire of China shall enjoy in Peru all 
the rights, privileges, immunities and advantages of every 
kind which in Peru are enjoyed by the Government, pub- 
lic officers, citizens, or subjects of the most favored 
nation.” 7 


As a further illustration, take the Treaty with Switzer- 
land: 


“Tt is understood that a Treaty of Establishment and 
Commerce shall be negotiated in due time. Until such 
a treaty shall have been concluded, the citizens of the 
High Contracting Parties shall in all respects enjoy the 
same privileges and immunities as are now or may here- 
after be granted to the subjects of the most favored 
nation.” § 


The third form is the conditional. It signifies that 
favors granted conditionally must be shared only upon 
the fulfillment of the conditions specified. 


“If any concession is granted by the Chinese Govern- 
ment to any foreign Government under special conditions, 
Portugal, on claiming the same concession for herself and 
for her own subjects, will equally assent to the conditions 
attached to it.’ ® 


The fourth form relates to the special treatment arising 
out of geographical contiguity or propinquity. That is, 
the special treatment is accorded only for the sake of 
geographical relations or positions, while the other Pow- 
ers, though enjoying the most favored nation treatment, 
cannot share the same except upon fulfilling the same 
geographical relation or propinquity. For example: 


“Tl est entendu que la France jouira de plein droit, et 
sans qu’il soit besoin de négociations preambles, de tous 


THE MOST FAVORED TREATMENT — 355 


les priviléges et immunités, de quelque nature quils 
soient, et de tous les avantages commerciaux qui four- 
raient €tre accordés dans la suite a la nation la plus 
favorisée par des traités ou conventions ayant pour objet 
le réglement des rapports politiques ou commerciaux 
entre la Chine et les pays situés au sud et sudouest de 
lempire chinois.” 1° 


As a further illustration: 


“It is agreed that the commercial stipulations con- 
tained in the present convention being of a special nature 
and the result of mutual concessions, consented to with 
a view to adapting them to local conditions and the pecu- 
liar necessities of the Burma-China overland trade, the 
advantages accruing from them shall not be invoked by 
the subjects of either Power residing at other places 
where the empires are coterminous, excepting where the 
same conditions prevail, and then only in return for 
similar concessions.” 14 


Similarly 


“the Governments of Japan and China engage that in 
all that relates to frontier trade between Manchuria and 
Corea most favored nation treatment shall be reciprocally 
extended.” 27 


Among the Powers having treaty relations with China 
those having unilateral and unqualified provisions and 
not modified by subsequent treaties are Belgium,** Den- 
mark,* Norway, France,1® Netherlands,’7 Russia," 
Spain.°* The states having the reciprocal form of the 
most favored nation treatment in China are (Austria- 
Pignearys’*))\ Brazil? ;\Congo’.Free States") Mexica,# 
Peru,”* Sweden,”* and Switzerland.”> The state having the 
conditional form of the most favored nation treatment 
is Portugal.*“ Those states enjoying special treatment 
on account of geographical continguity are those states 
having territories coterminous with that of China: namely, 


356 IMPAIRMENTS OF SOVEREIGNTY 

Great Britain,?® France,?* Russia,?® and Japan.?? Italy, 
however, is in a special class: she stipulated, in the 
Treaty of October 26, 1866, the unilateral and unqualified 


form of the most favored nation treatment,®° but with 
this additional engagement: 


“Similmente, se alcune delle Potenze Europu facesse 
alla China qualche utill concessione, la quale non fosse 
preguidice-vole ag’l’interesse del Governo o dei sudditi 
Italiani, il Governo de Sua Maesta’ il Re’ farebbe oqui 
sforzo per adorirvi.” 


The Great Powers, except Russia and France, enjoy- 
ing the unconditional and unilateral form of the most 
favored nation treatment, have all passed through suc- 
cessive stages of modification. Great Britain began with 
the unilateral and unqualified form, as we have seen in 
Article 8 of the treaty of October 8, 1843, which was 
again confirmed by Article 54 of the treaty of Tientsin, 
June 26, 1858,51 but by Article 1 of the supplementary 
convention of October 23, 1869, she assented to the con- 
ditional form: 


“China having agreed that British subjects shall par- 
ticipate in all advantages accorded by treaty to the sub- 
jects of other Powers, it is further agreed that British 
subjects desiring to participate in the advantages accorded 
by treaty to the subjects of other Powers shall partici- 
pate in such advantages on the same conditions on which 
they have been accorded to, and are participated in by, 
the subjects of such other Powers.” * 


In the subsequent treaty of March 1, 1894, relative to 
Burma and China, she conceded the reciprocal form, 
provided, however, that the language employed therein 
could be interpreted to include, not only Burma and the 
parts of China continguous thereto, but the whole of 
Great Britain and China: 


THE MOST FAVORED TREATMENT 357 


itis agreed that subjects of the two Powers shall each 
within the territories of the other enjoy all the privileges, 
immunities, and advantages that may have been, or may 


hereafter be, accorded to the subjects of any other 
nation.” 38 


Likewise, the United States began with a unilateral and 
unqualified form, as we have seen in Article 2 of the 
Treaty of Wanghia, July 3, 1844, but in the Treaty of 
July 28, 1868, she permitted the reciprocal form to be 
used: 


“Citizens of the United States visiting or residing in 
China shall enjoy the same privileges, immunities, or 
exemptions in respect to travel or residence as may there 
be enjoyed by the citizens or subjects of the most fa- 
vored nations: and, reciprocally, Chinese subjects visit- 
ing or residing in the United States shall enjoy the same 
privileges, immu«ities or exemptions in respect to travel 
or residence as may there be enjoyed by the citizens or 
subjects of the most favored nation; ” *° 


covering the rights of education and the establishment of 
educational institutions (Art. 7), but excepting the right 
of naturalization (Art. 6). While there is no treaty 
stipulation conceding the conditional form, it is reason- 
able to believe, inasmuch as the United States has per- 
sistently maintained the interpretation of the most fa- 
vored nation treatment, that, in absence of any qualifi- 
cation, the provision is to be construed as implying the 
limitation of conditions or concessions, so that there is 
no necessity for any express provision in the treaty. 
Hence, as the United States maintains that rule of inter- 
pretation, it is within reason to believe that the United 
States will, to be consistent, construe her treaty stipula- 
tions as conditional or qualified, even in the absence of 
specific mention of qualifications or conditions. 
Similarly, Japan commenced with a unilateral or un- 


358 IMPAIRMENTS OF SOVEREIGNTY 


qualified form, as we find in Article 6 of the Treaty of 
April 17, 1895,°* and in Articles 9 and 25 of the Treaty 
of July 21, 1896.%7 In the treaty of commerce, October 
8, 1903, however, she conceded the reciprocal treatment: 


“Tt is hereby expressly stipulated in addition that the 
Japanese Government, officers, subjects, commerce, navi- 
gation, shipping, industries, and properties of all kinds 
shall be allowed free and full participation in all privi- 
leges, immunities, and advantages which have been or 
may hereafter be granted by His Majesty the Emperor 
of China or by the Chinese Government or by the pro- 
vincial or local administrations of China to the Govern- 
ment, officers, subjects, commerce, navigation, shipping, 
industries, or property of any other nation. 

“The Japanese Government will do its utmost to se- 
cure to Chinese officers and subjects, residents in Japan, 
the most favorable treatment compatible with the laws 
and regulations of the empire.” *° 


Germany also set out with a unilateral and unqualified 
form.®® In the subsequent supplementary convention of 
March 31, 1880, however, she agreed to the conditional 
form, engaging to observe the necessary regulations at- 
tached to the privileges, favors, or immunities: 


“Article XL (referring to most favored nation treat- 
ment, quoted above) of the Treaty of the 2nd September, 
1861, is not affected by this regulation, and is hereby 
expressly confirmed. 

“Should German subjects, on the strength of this arti- 
cle, claim privileges, immunities or advantages which the 
Chinese Government may further concede to another 
Power, or the subjects of such Power, they will also 
submit to the Regulations which they have agreed upon 
in connection with such concession.” *° 


Turning now to the interpretation and the limitations 
of the most favored nation treatment, we find that there 
are two schools of interpretation. The first school is that 


THE MOST FAVORED TREATMENT = 359 


of a strict and literal interpretation, and it finds it expo- 
nent in Great Britain, who is at the same time the cham- 
pion of free trade. It maintains that, in absence of any 
specific stipulation limiting or qualifying the most fa- 
vored nation clause, the treatment resulting therefrom 
is to be construed as unconditional or without equivalent. 
That is to say, no matter whether the favor or privi- 
lege or concession is granted on condition or for a con- 
sideration, the same favor or privilege or concession 
must be shared by the most favored nation states with- 
out fulfilling the requisite condition or rendering the same 
reciprocal concession or compensation. Voicing the sen- 
timent of Great Britain, Earl Granville, in 1885, wrote: 


“From this (the American) interpretation Her Maj- 
esty’s Government entirely and emphatically dissent. The 
most favored nation clause has now become the most 
valuable part of the system of commercial treaties, and 
exists between almost all the nations of the earth. It 
leads more than any other stipulation to simplicity of 
tariffs and to ever-increased freedom of trade; while 
the system now proposed would lead countries to seek 
exclusive markets and would thus fetter instead of liber- 
ating trade. 


“Tt is, moreover, obvious that the interpretation now 
put forward would nullify the most favored nation 
clause; for any country, say, France, though bound by 
the most favored nation clause in her treaty with Bel- 
gium, might make treaties with any other country, in- 
volving reduction of duty on both sides, and, by the mere 
insertion of a statement that these reductions were 
granted reciprocally and for a consideration, might yet 
refuse to grant them to Belgium unless the latter granted 
what France might consider an equivalent. 

“Such a system would press most hardly on those coun- 
tries which had already reformed their tariffs, and had 
no equivalent concession to offer, and therefore Great 
Britain, which has reformed her tariff, is most deeply 
interested in resisting it.” ** 


360 IMPAIRMENTS OF SOVEREIGNTY 


The second school is that of liberal and practical inter- 
pretation which finds its spokesman in the United States 
who is also at the same time the champion of protection. 
It contends that, in the absence of any specific stipula- 
tion limiting or qualifying the ordinary simple most 
favored nation clause, the treatment is construed to cover 
only gratuitous favors and does not apply to those 
granted for a consideration or on condition. Hence, the 
clause is not to be interpreted literally, but to be given 
an implied understanding of excluding its application 
from favors granted for a reciprocal concession or on 
condition. Expressing the view of the United States Gov- 
ernment, Mr. Bayard in 1886 said: 


“You will doubtless have understood that where the 
words ‘qualified’ and ‘unqualified’ are . . . applied to the 
most favored nation treatment, they are used merely as 
a convenient distinction between the two forms such a 
clause generally assumes in treaties: one containing a 
proviso that any favor granted by one of the contracting 
parties to a third party shall likewise accrue to the other 
contracting party, freely if freely given, or for an equiva- 
lent if conditional; the other not so amplified. This 
proviso, when it occurs, is merely explanatory, inserted 
out of abundant caution. Its absence does not impair 
the rule of international law that such concessions are 
only gratuitous (and so transferable) as to third parties 
when not based on reciprocity or mutually reserved inter- 
ests as between the contracting parties. This ground 
has been long and consistently maintained by the United 
States. It was held by two of my predecessors, Mr. Clay 
and Mr, Livingston, that a covenant to extend to third 
parties privileges granted to a most favored nation only 
refers to gratuitous privileges, and does not cover privi- 
leges granted on the condition of a reciprocal advan- 
tage, i.e., for a consideration expressed.” * 


It is further maintained that the extension of the same 
privileges or favors to a most favored nation state as 


THE MOST FAVORED TREATMENT © 361 
have been secured by other states at a price or on con- 
dition or for special consideration will tend to destroy 
the equality of treatment which the clause aims to pre- 
serve, and thus make that state more favored than the 
most favored, which the clause purposes to prevent. 

“. .. The allowance of the same privileges and the 
same sacrifice of revenue duties, to a nation which makes 
no compensation, that have been conceded to another 
nation for an adequate compensation, instead of main- 
taining, destroys that equality of market privileges which 
the most favored nation clause was intended. It concedes 
for naqthing to one friendly nation what the other gets 
only for a price. It would thus become one source of 


international inequality and provide international hos- 
tility.” #8 


Holding the same view, the United States Supreme Court 
laid down the decision in Bartram vs. Robertson: 44 


“Our conclusion is that the Treaty with Denmark 
does not bind the United States to extend to that coun- 
try, without compensation, privileges which they have 
conceded to the Hawaiian Islands in exchange for valu- 
able concessions.” 


In conjunction with the two different schools of inter- 
pretation, the limitations or legitimate bounds of the most 
favored nation clause should also be noticed. Within 
certain limits, it is a precious article. It guarantees 
equality of treatment and prevents discrimination. But 
beyond its legitimate bounds it occasions inequality, in- 
justice, and unreasonable restraint of liberty of action 
on the part of the grantor. As there are numerous limi- 
tations, suffice it to point out the important ones. 

The first limitation is that the clause applies mainly 
to matters of commerce and navigation. It is intended 
to prevent discrimination in commercial affairs, particu- 
larly in tariff, tonnage and transportation rates. Its scope 


362 IMPAIRMENTS OF SOVEREIGNTY 


does not extend to political and other privileges. In 1913, 
regarding the Japanese protest against the Alien Land 
Holding Act of California, it was said: 


“The most favored nation clauses universally relate 
to matters of commerce and navigation; that alien own- 
ership of land has seldom been treated in the practice 
of the United States as a matter of most favored nation 
treatment, but has been secured only by special treaty 
stipulations.” 48 


The second limitation is the reciprocal concession. If 
a favor or privilege is granted for a consideration or with 
reciprocal compensation, the same favor or privilege can 
be shared only upon offering the same consideration or 
compensation. This is in accord with the practice of 
reciprocity. 


“This quality of reciprocity, which takes a case out 
of the category of gratuitousness, belongs, I apprehend, 
to all our concessions to foreign states. . . . Such con- 
cessions are based on reciprocity. We give the rights 
to them because they give the right to us. Hence, such 
privileges cannot be claimed under the most favored 
nation clause by foreign Governments to which they are 
not specifically ceded.” *¢ 


The third limitation is the conditional grant. That 
is, if the concession or favor is granted on certain con- 
ditions, the same concession or favor can be shared or 
claimed by another power only upon fulfillment or observ- 
ance of the stipulated conditions. As the conditions re- 
quired for the enjoyment of the favor or concession are 
usually provided so as to safeguard its proper use, it 
is essential that the conditions specified should be ful- 
filled before the enjoyment of the favor or concession 
can be sanctioned. Upholding this view, Mr. Olney, in 
connection with the question of American citizens avail- 
ing themselves of Japanese protection in regard to patents, 
trademarks, and designs, wrote in 1896: 


THE MOST FAVORED TREATMENT = 363 


“The Japanese contention is .. . that if a favor for 
a specific condition be stipulated with any other nation, 
no other may enjoy the favor except upon identical or 
equivalent conditions. ‘The theory on which this 
Government views the question is akin to that of 
ADIT 


The fourth limitation is special treatment due to geo- 
graphical propinquity. Thus, if one state adjoins an- 
other, and, by virtue of geographical contiguity, it con- 
cedes special privileges to the other, the other states, 
though enjoying the most favored nation treatment, can- 
not claim the same special privileges, unless they can also 
come into an identical geographical relationship. In a 
note of February 16, 1886, while protesting against dis- 
crimination in tonnage dues under the authority of the 
act of June 26, 1884, the German Government admitted: 


- “Tt cannot be doubted, it is true, that on grounds of 
a purely local character, certain treaty stipulations be- 
tween two Powers, or certain advantages automatically 
granted, may be claimed of third states not upon the 
ground of a most favored nation clause. Among these 
are included facilities in reciprocal trade on the border, 
between states whose territories adjoined each other. It 
is, however, not to be doubted that the international prac- 
tice is that such facilities, not coming within the scope 
of a most favored nation clause, are not admissible save 
within their restricted zones. . . .” **4° 


The frontier trade between China and France, or Great 
Britain, or Russia, or Japan, enjoys a reduction of about 
one-third of the prevailing tariff rates which is not claim- 
able under the most favored nation clause except upon 
the fulfillment of identical geographical relationships. 
The fifth limitation is the retaliatory discrimination. 
A state can retaliate for unequal and unreasonable treat- 
ment, which does not fall within the protection of the 
most favored nation clause. For instance, in response to 


364 IMPAIRMENTS OF SOVEREIGNTY 


a protest, based on the most favored nation treatment, 
made by Columbia on March 23, 1892, against the proc- 
lamation in pursuance of the McKinley Act of October 
1, 1890, authorizing the President of the United States 
to retaliate in tariff rates upon certain products, Mr. 
Blaine said: ““The law cited applies the same treatment 
to all countries whose tariffs are found by the President 
to be unequal and unreasonable.” °° 

The sixth limitation is the bounties. By this is meant 
that a state can levy additional duty on goods which have 
received bounties at home, so as to equalize the cost of 
these goods. “Lord Salisbury, July 15, 1899, replied that 
the Russian system, under which the excise duty on 
sugars is repaid in case of exportations, created an “arti- 
ficial stimulus,’ which had the same effect as ‘a bounty 
of a more direct character.’ . . . Wherever an artificial 
preference was produced by the direct legislative act 
of a Government which was a party to the most favored 
nation stipulation, the other Government might ‘redress 
the balance of trade which has thus been artificially dis- 
turbed.7).7 5.7 54 Again; on “November 20, 1902; hora 
Lansdowne, replying to the Russian memorandum, stated 
that .. . the course they had taken was .. . dictated 
solely by a desire to secure ‘equality of conditions’ for 
those engaged in the production and refining of sugar; 
and as other states did not hesitate to impose high and 
prohibitive tariffs for the protection of their trade in their 
own markets, His Majesty’s Government failed to see 
with what reason the Russian Government could ‘com- 
plain of a measure out of favor, but of simple and ele- 
mentary justice to British trade.’ ” ** 


With these limitations in mind, let us now consider the 
abuses or excesses in the operation or application of the 
most favored nation clause in China. First, it is not 
limited to matters of commerce and navigation, but ex- 
ceeding its legitimate bounds, it claims to include politi- 


THE MOST FAVORED TREATMENT — 365 


cal and other privileges. For example, the first article 
of the Treaty of July 10, 1898, with the Congo Free State, 
specifically mentions that the most favored nation treat- 
ment is to include privileges of jurisdiction which cannot 
mean any other than political privileges: 


“All privileges of person, property, and jurisdiction en- 
joyed by foreign nations under the Treaties concluded by 
China shall from henceforth be granted to the Congo 
Free State,” ** 


As a further illustration, in demanding the right to propa- 
gate Buddhism in China, in 1915, Japan based her demand 
on the most favored nation clause, arguing that inas- 
much as the other Treaty Powers were given the right 
to propagate Christianity by the operation of the most 
favored nation clause, she should have a similar right 
to propagate Buddhism in China; to which China replied 
that the scope of the most favored nation clause was 
limited to mere matters of commerce and navigation and 
did not extend to religious propagation except by specific 
treaty stipulations.** 

Second, it is unilateral and not reciprocal, unqualified 
and unconditional. As we have seen, in the treaties with 
Belgium, Denmark, France, the Netherlands, Russia, 
Norway, and Spain, the unilateral and unqualified form 
of the most favored nation treatment is stipulated. Thus, 
no matter whether China concedes favors or advantages 
for consideration or on condition, these Powers may 
claim the favors or advantages in question and yet refuse 
to offer the same consideration or concession or fulfill 
the same condition. In consequence, these states enjoy- 
ing the unilateral and unqualified form of the most fa- 
vored nation treatment can enjoy more privileges than 
the other states obligated to give concession or to fulfill 
conditions, thus resulting in inequality of treatment, inter- 
national friction and want of reciprocity, and so defeat- 


366 IMPAIRMENTS OF SOVEREIGNTY 


ing the very purposes for which the clause was originally 
invoked. ) 

Third, because of existing practices in connection with 
this .clause, China practically cannot carry out many 
reforms or undertake several vital measures without the 
unanimous consent of the Powers enjoying the most fa- 
vored nation treatment. Having conceded to one Power 
the right to be consulted on certain matters, by the un- 
justifiable application of the clause, all the other Powers 
claim the same right. Thus, China cannot regulate or 
change her tariff without the unanimous consent of the 
Powers enjoying the most favored nation treatment; and 
this experience has proved to be quite impossible, or at 
least extremely difficult, to obtain. 

In view of these serious disadvantages resulting from 
the present operation of the most favored nation clause 
in China, the Chinese Government, through its Delega- 
tion, applied to the Paris Peace Conference for the 
insertion, in the preliminaries of Peace with Germany 
and Austria-Hungary, of a provision for the adoption 
of the principles of equality and reciprocity as the basis 
of a new treaty of commerce and for the relinquishment 
of the most favored nation treatment. The desired inser- 
tion reads: 


“Germany engages to adopt the principles of equality 
and reciprocity as the basis of a new treaty of commerce 
and general relations to be concluded with China and 
relinquish therein on her part the principle of the so- 
called most favored nation treatment; and the said new 
treaty, when concluded, shall guide all intercourse be- 
tween the two countries in future.” »®° 


It must, however, be observed that this policy of relin- 
quishing the most favored nation clause from the future 
treaties of commerce of China, as evidently adopted at 
the Paris Peace Conference, is difficult to carry out and 
probably unwise to pursue. In the first place, the Pow- 
ers enjoying the most favored nation treatment will not 


THE MOST FAVORED TREATMENT — 367 


be willing to relinquish the clause which is considered 
as the cornerstone of their commercial rights in China. 
In their eyes this little provision is priceless. It contains 
all the essentials of their commercial privileges in China. 
In the second place, judging solely from the point of view 
of China, it would not be wise to relinquish the clause 
totally, however obnoxious is its operation at present. 
For if China demands that this clause should be elimi- 
nated from all future treaties of commerce, to be con- 
sistent, she will have to relinquish the same clause or 
rather the same treatment which she now enjoys, or will 
enjoy, in other states. Hence, in following the principle 
of reciprocity, inasmuch as she would not give other 
states the most favored nation treatment, she would not 
receive the same treatment from other states. If she does 
not desire to enjoy this treatment, she may consistently 
ask for the relinquishment of the clause by the other 
states; but if she does desire to retain the same privi- 
lege, then such a policy of relinquishment will merely 
injure herself. 

Relinquishment being practically impossible and un- 
wise, the solution of this problem seems to lie in a 
compromise, that is, in retaining the clause and yet at 
the same time limiting its operation within legitimate 
bounds. The clause should still be retained in all China’s 
commercial treaties that have been, or may be, concluded, 
thus satisfying the foreign states and at the same time 
preserving the most favored nation treatment for her- 
self. It should, however, be hedged about on all sides. 
It should be limited exclusively to commerce and navi- 
gation, and should not be permitted to extend to political 
and other matters. It should be bilateral and reciprocal, 
and not unilateral and non-compensating. It should be 
qualified and conditional, and not unlimited and uncon- 
ditional. A sample form of such a most favored nation 
clause,—qualified, conditional, and reciprocal, and lim- 
ited to commerce and navigation,—is as follows: 


368 IMPAIRMENTS OF SOVEREIGNTY 


“The high contracting parties agree that in all that con- 
cerns navigation and commerce, favors which either has 
already granted or may hereafter grant to any other 
state, shall become common to the other party who shall 
enjoy the same freely if the concession is freely made; 
or upon allowing the same compensation if the conces- 
sion is conditional.’ °° 


Thus can China retain for herself the advantages of 
the reciprocal most favored nation treatment, and satisfy 
the commercial Powers that are determined to build their 
trade relations upon the cornerstone of the clause. Thus, 
above all, can she liberate herself from the bondage of 
the present unlimited and excessive application of the 
clause. 


NOTES TO CHAPTER XXII 


State Papers, Vol. 31, p. 133. 
State Papers, Vol. 32, p. 791. 
Hertslet’s China Treaties, Vol. 1, No. 39, p. 258 et seq. 
he Hertslet, Vol. 1, No. 6, p. 34, Treaty of Tientsin, June 26, 
1858. 

5. Hertslet, Vol. 1, No. 64, p. 381, Art 25. 

6. Hertslet, Vol. 1, No. 40, p. 284, Art. 40. 

7. Hertslet, Vol. 1, No. 71, p. 419, Art. 16, Treaty with Peru, 
June 26, 1874. 

8. MacMurray, 1918/8, Declaration attached to the Treaty of 
Amity, July 13, 1918, between China and Switzerland. 

9. Hertslet, Vol. 1, No. 73, p. 426, Art. 10, Treaty with Por- 
tugal, Dec. 1, 1887. 

10. Hertslet, Vol. 1, No. 48, p. 313, Art. 12, Additional Con- 
vention with France, June 26, 1887. 

11. Hertslet, Vol. 1, No. 20, pp. 108-109, Art. 18, Convention 
with Great Britain respecting Burma and China, Mar. 1, 1894. 

12. Hertslet, Vol. 1, No. 67, p. 397, Art. 11, Treaty with 
Japan of Dec. 22, 1905. 
fees Hertslet, Vol. 1, No. 34, p. 233, Art. 45, Treaty of Nov. 2, 

14. Hertslet, Vol. 1, No. 38, pp. 253, 257, Treaty of July 13, 
1863, Arts. 23 and 54. 

15. Hertslet, Vol. 1, No. 93, pp. 527-528, Art. 2, Treaty of 
March 20, 1847. 

16. Hertslet, Vol. 1, No. 39, p. 268, Treaty of Whampoa, Oct. 
24, 1844, Art. 35; also Art. 40, Treaty of Tientsin, June 27, 1858, 


PwONe 


THE MOST FAVORED TREATMENT = 369 


Hertslet, Vol. 1, No. 40, p. 284; also Art. 3, Treaty of April 25, 
1886, Hertslet, Vol. 1, No. 47, p. 302; also Art. 7, Treaty of 
June 26, 1887, Hertslet, Vol. 1, No. 48, p. 313. 

oe Hertslet, Vol. 1, No. 70, p. 414, Nee 15, Treaty of Oct. 6, 

18. Hertslet, Vol. 1, No. 82, pp. 460-461, Art. 12, Treaty of 
June 13, 1858. 

19A. Hertslet, Vol. 1, No. 91, p. 520, Treaty of Oct. 10, 1864, 
Arts. 47 and 50. It will be noticed that the reciprocity in this 
case was limited only to the trade with the Philippine Islands, 
and that as the Philippine Islands are now in the possession of 
the United States, this reciprocal treatment is therefore nullified. 

19B. Hertslet, Vol. 1, No. 33, pp. 222-223, Art. 43, Treaty of 
Sept. 2, 1869. 

20. Hertslet, Vol. 1, No. 35, pp. 236-237, Arts. 5 and 8, Treaty 
of Oct. 3, 1881. It will be noticed that, in the case of Brazil, the 
most favored nation treatment is not only reciprocal but also 
conditional. Art. 5. 

21. Hertslet, Vol. 1, No. 36, pp. 240-241, Arts. 1 and 2, Treaty 
of July 10, 1898. 
oe Hertslet, Vol. 1, No. 69, p. 402, Treaty of Dec. 14, 1899, 

Uo. 
ton Hertslet, Vol. 1, No. 71, p. 419, Art. 16, Treaty of June 26, 

24. MacMurray, 1908/11, Arts. 3 and 4. 

25. MacMurray, 1918/8, Declaration attached to Treaty of 
June 13, 1918. It is to be noticed that the grant of most favored 
nation treatment is limited to the time until a treaty of establish- 
ment and commerce is made. 
baa Hertslet, Vol. 1, No. 73, p. 426, Art. 10, Treaty of Dec. 1, 

26. Hertslet, Vol. 1, No. 20, pp. 108-109, Arts. 9 and 18, Treaty 
of March 1, 1894, relative to Burma and China. 

27. Arts. 6 and 7, Treaty of April 25, 1886, Hertslet, Vol. 1, 
No. 47, p. 303 et seq.; Art. 7, Treaty of June 26, 1887, Hertslet, 
Vol. 1, No. 48, p. 313: modified by Art. 4, Treaty of June 20, 
1895, Hertslet, ‘Vol. b No. SoD ae 

28. Hertslet, Vol. 1, No. 85, p. 492 et seq., Russian land trade 
pagers annexed to Treaty of Feb. 24, 1881. 

Hertslet, Vol. 1, No. 67, p. 396, Att. 11, Treaty of Dec. 22, 


30. Hertslet, Vol. 1, No. 60, pp. 357, 360, Arts. 24 and 54. 

31. Hertslet, Vol. 1, No. 6, p. 34. 

32. Hertslet, Vol. 1, No. 11, p. 62. 

33. Hertslet, Vol. 1, No. 20, p. 108, Art. 22. 

34. State Papers, Vol. 27D: 791: also see Hertslet, Vol. 1, 
No. 94, pp. 545, 551-552. 

35. Art. 6, Hertslet, Vol. 1, No. 96, p. 556; also Art. 3, Treaty 
of Nov. 17, 1880, Hertslet, Vol. 1, No. 08, pp. '561- 562; also Art. 5; 
Treaty of Oct 8, 1903, Hertslet, Vol. 1, No. 100, p. 571. 

36. Vol. , No. 62, p. 365. 


370 IMPAIRMENTS OF SOVEREIGNTY 


37. Hertslet, Vol. 1, No. 64, pp. 376, 381. 

38. Hertslet, Vol. 1, No. 66, pp. 386- 387, Art. 9. 

39. Hertslet, Vol. 1, No. 56, p. 339, Art. 40, Treaty of ms 2; 
1861; also Art. Ds: 335. 

i Hertslet, Vol. Ty No | 5/, ‘B. 943, Art, & 

TacB; Moore, International Law Digest, Vol. 5, pp. 270-271, 
Ear Granville, Sec. of State for For. Affairs, to Mr. West, 
British Minister, Feb. 12, 1885. Blue Book Commercial No. 4, 
1885, pp. 21-22. 

42. Ibid., Vol. 5, 273, Mr. Bayard, Sec. of State, to Mr. 
Hubbard, July 17, 1886, MS. Inst. Japan III, p. 425; cf. Whitney 
vs. Robertson, 1888, 124 U. S. 190. 

43. Ibid., Vol. 5, p. 278, Mr. Sherman, Sec. of State, to Mr. 
Buchanan, "Minister to Argentine Republic, Jan. 11, 1898. 

44. 122'U. S. 116. 

45. 8 American Journal of International Law, editorial com- 
ment, 1914, p. 578; Tyau, Treaty Obligations between China and 
Other States, p. 198. 

46. Moore, op. cit., Vol. 5, p. 272, Mr. Bayard, Sec. of State, 
to Mr. Miller, June 15, 1886, 160 MS. Dom. Let. 481. 

47. U. S. For. Rel., 1896, p. 429 et seq., Mr. Olney, Sec. of 
State, to Mr. Dun, Minister to Japan, Nov. 12, 1896; Moore, op. 
cit., Vol. 5, p. 316. 

48. Ibid., Vol. 5, p. 290, the note of German Minister to the 
United States State Department, dated Feb. 16, 1886, quoted in 
Mr. Bayard’s report, Sec. of State to the President, January 14, 
1889, H. Ex. Doc. 74, 50th Congress, Second Session. 

49. Moore, op. cit., Vol. 5, p. 289, the opinion of Attorney 
General, Sept. 19, 1885, quoted in report of Mr. Bayard, Sec. of 
State, to the President, Jan. 14, 1889, H. Ex. Doc. 74, 50th 
Congress, Second Session. 

. U. S. For. Rel., 1894, App. I, pp. 472, 473, Mr. Blaine, 
Sec. of State, to Mr. Hertado, Columbian Minister, May 31, 
1892; Moore, op. cit., Vol. 5, p. 304. 

51. Moore, op. cit., Vol. 5, p. 307. 

52. Ibid:, Vol. 5, pp. 308-309. 

53. Hertslet, Vol. 1, No. 36, p. 240. 

54. Tyau, op. cit., p. 198. 

55. Millard’s Review, Supplement, July 17, 1920, pp. 4-5, Mil- 
lard, China’s Case at the Peace Conference. 

56. S. K. Hornbeck, the most favored nation clause, American 
Journal of International Law, Vol. 3, 1909, p. 405; also see his 
three articles, pp. 396, 619, 798, 


XXIIT 
TARIFF AUTONOMY 


WE now come to another form of the impairment of 
China’s sovereignty, and that is, servitude with respect 
to tariff autonomy. It is a principle in international law 
that every state with full sovereignty has the right to 
regulate its own tariff by legislation or otherwise, but 
in China, this prerogative of sovereignty is denied by 
the foreign Powers. In fact, tariff autonomy has become 
so much impaired that, either by virtue of express state 
treaty provisions or through the operation of the most 
favored nation clause, China can not regulate or change 
her tariff, made in convention with the foreign Powers, 
without first securing the unanimous consent of the Pow- 
ers concerned. And experience has demonstrated that 
the securing of such a unanimous vote is extremely diff- 
cult, if not well-nigh impossible. 

The origin of Chinese servitude in tariff autonomy 
dates back to the Treaty of Nanking, August 29, 1842. 
Article X of the treaty stipulated: 


“His Majesty the Emperor of China agrees to estab- 
lish at all the ports which are, by Article II of this treaty, 
to be thrown open for the resort of British merchants, 
a fair and regular tariff of export and import customs 
and other dues, which tariff shall be publicly notified 
and promulgated for general information. And the Em- 
peror further engages, that when British merchandise 
shall have once paid at any of the said ports the regu- 
lated customs and dues, agreeable to the tariff to be 
hereafter fixed, such merchandise may be conveyed by 
Chinese merchants to any province or city in the inte- 
rior of the Empire of China, on paying a further amount 

371 


372. IMPAIRMENTS OF SOVEREIGNTY 


as transit duties, which shall not exceed 


per cent 
on the tariff value of such goods.’ ? 


In accord with this, in the supplementary Treaty of Oc- 
tober 8, 1843, the tariff of import and export duties 
was agreed upon, averaging five per cent ad valorem 
except in some instances when the rate went up as high 
as ten sper cent.’ 

In the subsequent American Treaty of July 3, 1844,° 
and the French Treaty of October 24, 1844,* there was 
attached in each case a tariff of duties. In the American 
Treaty, it was specifically stated that the consent of the 
United States was required for any modification in the 
tariff list: 


“Citizens of the United States resorting to China for 
the purposes of commerce will pay the duties of import 
and export prescribed in the tariff, which is fixed by 
and made a part of this treaty. . . . If the Chinese Gov- 
ernment desires to modify in any respect the said tariff, 
such modifications shall be made only in consultation 
with consuls or other functionaries thereto duly author- 
ized in behalf of the United States, and with the consent 
Chereot ye nC e ie ye 


In 1858, when Great Britain and France had defeated 
China in the so-called Arrow War (the Second War with 
Great Britain), the British Treaty of Tientsin, June 26, 
1858, provided for a revision of the tariff * which was 
to endure for a period of ten years, subject to a demand 
for revision by either party at the end of the term,’ and 
for the fixation of the transit duties at the rate of two 
and a half per cent ad valorem.’ In pursuance of the 
above provision for tariff revision, a subsequent agree- 
ment was made on November 8, 1858,° containing rules 
of trade and a tariff list.° In general, a five per cent 
ad valorem duty both on imports as well as on exports 
was provided. “Articles not enumerated in either list 
(export and import), nor in the list of duty-free goods, 


TARIFF AUTONOMY 373 


will pay an ad valorem duty of five per cent, calculated 
on the market value” (Rule 1). The transit duties were 
again fixed at one-half of the tariff duties (Rule 7). A 
uniform system of taxation was provided: “It is agreed 
that one uniform system shall be enforced at every port” 
(Rule 10). A duty-free list was stipulated consisting 
of gold and silver bullion, foreign coins, flour, and the 
daily necessities of foreign residents in China (Rule 2). 
Contraband goods comprised gunpowder, ammunition 
and other implements of war and salt (Rule 3).4% Simi- 
larly with the French Treaty of June 27, 1858,1? a new 
tariff list and commercial regulations were attached." 
The United States drew up a separate convention at 
Shanghai, November 8, 1858,14 with a new tariff and 
regulations of trade and transit. Russia simply stipu- 
lated that her merchants should pay the same duties as 
were levied on other foreign merchants. 

Since 1858, despite the provision for periodic revision 
of tariff at the end of ten years, for one reason or an- 
other the privilege has not been availed of but on two 
occasions,—in 1902 and 1918. In the final protocol for 
the settlement of the Boxer Trouble, September 7, 1901,*¢ 
the Maritime Customs, the Native Customs, and the Salt 
Gabelle, were made the securities of the Boxer indem- 
nity amounting to 450,000,000 Haikuan taels to be paid 
off in annual installments until 1940 (Art. 6), and the 
import tariff was to be raised to an effective five per 
cent ad valorem, and the ad valorem duties, as far as 
feasible, were to be converted into specific duties, cal- 
culated on the average value of merchandise at the time 
of landing during the three years, 1897-1899 (Art. 6). 
In pursuance of these provisions, the Agreement of 
Shanghai, August 29, 1902, was made, signed by the 
special commissioners of Austria-Hungary, Belgium, 
Germany, Great Britain, Japan, Netherlands, Spain, and 
later by those of the United States, France, and Sweden 
and Norway, and providing for a new tariff list?” The 


37/4 IMPAIRMENTS OF SOVEREIGNTY 


values of the goods were revised, but the uniform rate 
of five per cent ad valorem remained unmodified. 

Meanwhile, in the Mackay Treaty of September 5, 
1902, the abolition of likin was provided, and as a com- 
pensation, import duties were to be raised to not more 
than twelve and one-half per cent and export duties to 
not more than seven and one-half per cent. The Pream- 
ble of Article VIII of that treaty reads: 1 


“The Chinese Government recognizing that a system 
of levying Likin (Inland Transit Tax) and other duties 
on goods at the place of production, in transit, and at 
destination, impedes the free circulation of commodities 
and injures the interests of trade, hereby undertake to 
discard completely these means of raising revenue with 
the limitation mentioned in Section 8. 

“The British Government, in return, consent to allow 
a surtax in excess of the tariff rates for the time being 
in force to be imposed on foreign goods imported by 
British subjects and a surtax in addition to the export 
duty on Chinese produce destined for export abroad or 
coastwise. 

“It is clearly understood that, after Likin barriers 
and other stations for taxing goods in transit have been 
removed, no attempt shall be made to revive them in 
any form or under any pretext whatever; that in no 
case shall the surtax on foreign imports exceed the 
equivalent of one and a half times the import duties 
leviable in terms of the Final Protocol signed by China 
and the Powers on the 7th day of September, 1901; that 
payment of the import duty and surtax shall secure for 
foreign imports, whether in the hands of Chinese or 
non-Chinese subjects, in original packages or otherwise, 
complete immunity from all other taxation, examination 
or delay; that the total amount of taxation leviable on 
native produce by export abroad shall, under no circum- 
stances, exceed seven and one-half per cent ad valorem.” 


This consent, however, for an increase of the import 
tariff to twelve and one-half per cent and of export duty 


TARIFF AUTONOMY 6/5 


to seven and one-half per cent in recompense for the abo- 
lition of likin was made under the following conditions: 


“1. That all Powers who are now or who may here- 
after become entitled to most favored nation treatment in 
China enter into the same engagements. 

“2. And that their assent is neither directly or indi- 
rectly made dependent on the granting by China of any 
political concession or of any exclusive commercial con- 
cession. 

“3. Should the Powers entitled to most favored na- 
tion treatment have failed to agree to enter into the 
engagements undertaken by Great Britain under this 
Article by the Ist January, 1904, then the provisions of 
the Articles shall only come into force when all the 
Powers have signed their acceptance of these engage- 
ments.” 2° 


Similar consent was also granted in the American Treaty 
of October 8, 1903,?° and in the Japanese treaty of the 
same date.?4_ Inasmuch, however, as the unanimous con- 
sent is required of the Powers that are enjoying or 
may enjoy the most favored nation treatment, as stipu- 
lated in the British conditions, the provisions have so far 
been non-effective. 


The last revision of the tariff took place in 1918. It 
was in connection with China’s entrance into the World 
War in 1917 that the Allied Powers again consented to 
a revision, but this only to bring the tariff to an effective 
five per cent.2? They assented to “the principle of in- 
crease of the Maritime Customs duties to an effective 
rate of five per cent ad valorem, a commission including 
Chinese delegates to be intrusted with the modifications 
to be adopted in the system of customs tariffs in the 
interests of all the contracting parties, and the Allied 
Governments lending the Chinese Government their good 
offices in order to obtain the acceptance by the neutral 


376 IMPAIRMENTS OF SOVEREIGNTY 


Powers of this increase in the Maritime Customs duties,” 
at the same time demanding the promulgation by the 
Chinese Government of a general tariff for all countries 
without treaties. In pursuance of this consent, a tariff 
revision commission met in Shanghai in January, 1918. 
The basis of revision was to be “the average of the values 
of imports as they appeared upon invoices during the 
years 1912-1916.” 23 The rates thus fixed, which became 
effective in August, 1919, are to last for at least two years 
after the end of the war, at which time another revision 
may be made. Estimated in accordance with the pre- 
vailing price of 1918, the new tariff now in force amounts 
only to about four per cent effective.** 


Adverting to the foreign administration of the Chinese 
Maritime Customs, the beginning of such supervision 
dated back to the time of the Taiping Rebellion, when, 
in September, 1853, the Chinese city of Shanghai was 
captured by the Taiping rebels. In consequence, the 
Chinese customs was closed and foreign merchants had no 
officials to receive customs duties. In order to meet the 
emergency the foreign consuls collected the duties for 
a while, but this soon proved to be quite irksome. On 
June 29, 1854, therefore, the following agreement was 
entered into by the Shanghai Taotai and the British, 
American and French consuls for the establishment of 
a foreign board of inspectors: 


“Rule 1. The chief difficulty experienced by the super- 
intendent of customs having consisted in the impossi- 
bility of obtaining Customs House officials with the 
necessary qualifications as to probity, vigilance, and 
knowledge of foreign languages, required for the en- 
forcement of a close observance of treaty and customs 
house regulations, the only adequate remedy appears to 
be in the introduction of a foreign element into the 
customs house establishment, in the persons of foreigners 
carefully selected and appointed by the tautai, who shall 


TARIFF AUTONOMY 377 


apply the deficiency complained of, and give him efficient 
and trustworthy instruments wherewith to work.” 244 


Under this agreement a board of three foreign in- 
spectors was appointed, of which Captain Sir Thomas F. 
Wade was the chief executive officer. On his resigna- 
tion a year later, Mr. Horatio Nelson Lay was appointed. 
This continued until 1858, when the tariff commission 
met and agreed to rules of trade of which the tenth 
stipulated for the appointment of a British subject as 
Inspector-General to assist the High Commissioner ap- 
pointed by the Chinese Government: *° 


“The high officer appointed by the Chinese Govern- 
ment to superintend foreign trade will accordingly, from 
time to time, either himself visit, or will send a deputy 
to visit, the different ports. The said high officer will 
be at liberty, at his own choice, and independently of 
the suggestion or nomination of any British authority, 
to select any British subject he may see fit to aid him 
in the administration of the customs revenue; in the 
prevention of smuggling; in the definition of port boun- 
daries; or in discharging the duties of harbor-master; 
also in the distribution of lights, buoys, beacons and the 
like, the maintenance of which shall be provided for out 
of the tonnage dues.” 


Under this provision Mr. H. N. Lay was appointed 
Inspector-General in 1859, but he soon fell into dis- 
agreement with the Chinese Government over the pur- 
chase of a fleet of gunboats for the suppression of pirates, 
because of which he was permitted to resign in 1863. The 
successor of Mr. Lay was Mr. Robert Hart, who was 
knighted in 1882 for his distinguished service in the or- 
ganization and administration of the Chinese Maritime 
Customs. He held the office until 1908, when he was suc- 
ceeded by Mr. F. A. Aglen. Thus, abiding by the pledge 
of 18987° that a British subject should be appointed 
Inspector-General while British trade predominates, the 


378 IMPAIRMENTS OF SOVEREIGNTY 


Chinese Government has successively appointed the 
British to that important post. 


Turning to the tariff system and its administration, the 
rate of duty on imports, we find, is five per cent ad 
valorem calculated on the average of the prevailing prices 
of 1912-1916, inclusive. The rate of duty on exports 
still remains five per cent ad valorem as fixed in the 
treaties of 1858. A drawback of the duty paid can be 
obtained if the imported goods are reéxported within 
three years, either to another open port or to a foreign 
port.27, Goods shipped from one open port to another 
are to pay five per cent on departure and two and a half 
per cent on arrival.2* The frontier trade with Russia, 
Korea, Annam and Burma obtains a reduction usually 
of one-third of the usual rate at the treaty port. The 
foreigner further is permitted the option of paying the 
transit dues in the inland trade through tolls at the 
different stations or by a single payment at the rate of 
half of the tariff duties, or two and a half per cent, 
which will exempt his goods from all further exactions in 
rans 

There are four kinds of customs in China. The first 
is the Maritime Customs located at the treaty ports and 
under foreign supervision. The second is the frontier 
customs located at the boundaries between China and 
Russia, Korea, Annam and Burma, which are also under 
foreign supervision. The third is the customs in the 
leased territories, situated usually at the frontier between 
the borders of the leased territories and China. They are 
likewise under the control of the Inspector-General of 
Maritime Customs, although the commissioners in charge 
are usually of the nationality to whom the leased ter- 
ritory pertains. The fourth kind is the native customs 
for the collection of inland duties. They are generally 
under the control of the Central Government at Peking, 
except those located within fifty li radius of the treaty 


TARIFF AUTONOMY 379 


ports which have been annexed since 1901 to the Mari- 
time Customs.”® 

The Maritime Customs, despite foreign supervision, 
remains, nevertheless, a branch of the Chinese Govern- 
ment. While an autocrat in his administration, to whom 
the Chinese Government does not dictate nor interfere in 
appointments or administration, the Inspector-General 
is yet under the authority of the Chinese Government, and 
administers the service in conformity with the wishes 
and commands of the Peking Government. The customs 
receipts, while accounted for by foreign customs com- 
missioners, do not pass through their hands, but are paid 
by the importer and the exporter to the bank or deposi- 
tory designated by the Chinese Government. The re- 
ceipts, however, cannot be drawn upon by the Chinese 
Government until the obligations of the foreign debts 
for which the customs revenue has been pledged as 
security have been discharged. 


We now come to the disadvantages of the tariff sys- 
tem in China. In the first place, the tariff as fixed lacks 
the element of reciprocity. That is to say, it is a one- 
sided or unilateral tariff, imposing restrictions on China, 
but offering no concession or compensation in return. 
Thus, foreign importers pay only five per cent ad valorem, 
but Chinese importers have to pay whatever foreign 
states levy. 

In the second place, the tariff as now fixed at a 
uniform rate of five per cent ad valorem is unscientific. 
It does not differentiate raw materials and manufactured 
goods, taxing all alike at five per cent ad valorem, which 
practice has long been discarded by modern states adopt- 
ing a scientific tariff. Further, it fails to distinguish 
luxuries from necessities, levying the same uniform duty 
of five per cent on both, which distinction all scientific 
tariffs make. The glaring contrast between Chinese tariff 
duties and those of the Great Powers can be seen in the 


380 IMPAIRMENTS OF SOVEREIGNTY 


following table of the tariff duties on tobacco and liquor 
as levied in 1913: 5° 


Tobacco S pirits 
La Wis, rd: io. eae 
ENGLAND 8 6 per Ib. 15 2 per gal. 
Unitep STATES 185.9: 8 andw5%a 10 IOs ae 
FRANCE 1 7 2% ape ly 2 6 Hee Ad 
JAPAN 355% 10-202 eres 
CHINA 5% 414% “ 6 


On the other hand, articles which should be imported 
free of duty, such as the necessities of life, pay the same 
uniform rate of five per cent ad valorem. The disparity 
is indicated in the following table of the percentage of 
value of articles imported free of duty into China and 
the other countries in 1913: *4 


CORTINA xis hey hk Siaete ie eee ia 6.5% 
PARAM, CeO ti, ois aa iares ators eee 49.5% 
PRA NCR OAL A SUS TOR AS 50.0% 
UNITED HISTATES (oom eae cae es 54.5% 
ENGLAND an: sae satan ees eee 90.7% 


In the third place, duties are rigid and inflexible. The 
rate cannot increase nor decrease as the needs of revenue 
require. It is constantly out of adjustment with rising 
prices. Its rates for imports are estimated on the basis 
of the average price of 1912 to 1916, inclusive, that is, 
five years ago, and except for a revision in the imme- 
diate future, in the face of the rising tide of price levels, 
they will soon be out of adjustment with market prices. 
The rates for export are still based on those fixed by 
the treaties of 1858, which were concluded more than half 
a century ago. 

In the fourth place, the operation of the present tariff 
system results in a shortage of revenue. Based on the 
average of the prevailing prices of 1897-8-9 until 1919, 
and since then, on that of the prevailing prices of 1912- 


TARIFF AUTONOMY 381 


1916, inclusive, the revenues collected, in view of advanc- 
ing prices, are wholly incommensurate with the fiscal 
needs of the Government. The uniform rate of five per 
cent ad valorem being so low and unchangeable, it is no 
wonder that customs receipts should constitute a rela- 
tively small percentage of the total income of the Chinese 
Government. 

What is worse, out of the shortage of revenue, there 
arises another great evil, and that is the likin or the inland 
transit dues. Because of the dire needs of the Govern- 
ment, this cannot be abolished without a compensating 
increase in tariff which, as we have seen, cannot be ob- 
tained without the unanimous consent of all the Treaty 
Powers enjoying, or that may enjoy, the most favored 
nation treatment. In view of the privilege of commuta- 
tion granted to foreign traders who are required to pay 
only two and a half per cent at the Maritime Customs, 
Chinese merchants denied this privilege have to pay all 
the tolls collected at the successive likin stations varying 
from ten per cent within the province to some twenty 
per cent for transit through several provinces. Thus in 
commercial competition foreign merchants are favored 
through the likin reduction, equivalent to the difference 
between the two and a half per cent paid by the foreign 
merchants and the ten to twenty per cent, or more, paid 
by the Chinese. Thus, the likin system tends to destroy 
the Chinese inland trade and to deter the growth of 
Chinese industry, while it favors foreign commerce.*” 

In the fifth place, the present tariff system deprives 
China of one of her most important attributes of sov- 
ereignty, the right of taxation, or, to be more accurate, 
the right to regulate her own tariff. As it is, China is 
crippled to such an extent that she cannot alter her tariff 
without the consent of the Powers,—nay, what is worse, 
their unanimous consent. Therefore, in so far as the 
control of the tariff is in the hands of the foreign Powers, 
to that extent is China’s sovereignty impaired. 


382. IMPAIRMENTS OF SOVEREIGNTY 


In view of these serious disadvantages, the Chinese 
Government is determined to recover tariff autonomy at 
the earliest moment possible. In 1906 she established the 
Shui-wu-chu, or Board of Revenues, to supervise and 
centralize the administration of the revenue departments 
of the Government, including the Maritime Customs, 
which step, however, did not do away with the foreign 
supervision of the Chinese Martime Customs. In 1908, 
a Customs Training College was established at Peking 
to prepare students for customs service when her con- 
trol of the customs should be recovered. Besides these 
preparatory measures, at the Paris Peace Conference, 
the Chinese Government, through its Delegation, an- 
nounced its claim for the restoration of her tariff 
autonomy. 


“To conform to the aim and object of the League 
of Nations it is urgently desired that the right of China 
to revise the existing tariff conventions should be recog- 
nized and agreed to by the friendly Powers. 


“The prolonged unfavorable balance of trade and the 
constant increase of national debt have created a serious 
financial and economic stress which can only be relieved 
by consolidating the system of taxation and encouraging 
the export trade, which will in turn benefit the importers 
by increasing the people’s purchasing power. This reform 
has long been overdue, and in placing China’s case before 
the Peace Conference the Chinese Government have be- 
hind them the voice of the whole country. It is to be 
hoped that the friendly Powers will restore to China 
the same fiscal right as is enjoyed by all independent 
nations so that the Chinese people may develop their 
natural resources, become better customers of the world’s 
commodities, and contribute their share to the progress 
and civilization of mankind.” *% 


As a practical measure, the Chinese Government pro- 
posed to supersede the conventional tariff two years there- 


TARIFF AUTONOMY 383 


after by the general tariff now applicable to the non- . 
treaty Powers, that is, by 1921. Prior, however, to the 
complete restoration, it proposed to enter into negotiation 
with the Powers with a view to arranging a new conven- 
tional tariff on the articles in which they are especially 
interested, and, under these conditions: 


“1. Any favorable treatment must be reciprocal. 
“2. A differential scale must be established so that 


luxuries should pay more and raw materials less than 
necessaries. 


“3. The basis of the new conventional rate for neces- 
saries must not be less than twelve and a half per cent 
in order to cover the loss of revenue resulting from the 


abolition of likin as provided for in the commercial 
treaties of 1902-1903. 

“4. At the end of a definite period to be fixed by new 
treaties, China must be at liberty not only to revise the 
basis of valuation, but also the duty rate itself. 

“In return for such concessions China is willing to 
abolish the undesirable tax of likin so that anything that 
tends to hinder the development of trade may be removed 
ance (for, all.” * 


Notwithstanding the failure of her claim, China recov- 
ered her tariff autonomy from Germany and Austria- 
Hungary. Article 128 of the Treaty of Peace with Ger- 
many reads: “Germany renounces in favor of China all 
benefits and privileges resulting from the provisions of 
the final Protocol signed at Peking on September 7, 1901, 
and from all annexes, notes and documents supplementary 
thereto.” This includes the relinquishment of German 
rights in Chinese tariffs. Article 129 further stipulates: 
“China, however, will no longer be bound to grant to 
Germany the advantages or privileges which she allowed 
Germany under these arrangements.” ‘This refers to the 
arrangement of August 29, 1902, regarding the new 
Chinese Customs Tariff, thus specifically eliminating Ger- 
many from the list of the privileged nations in the 


384 IMPAIRMENTS OF SOVEREIGNTY 


Chinese tariff agreement. Similarly, she recovered her 
tariff autonomy from Austria and Hungary.®° 


NOTES TO CHAPTER XXIII 


Hertslet’s China Treaties, Vol. 1, No. 1, p. 10. 
State Papers, Vol. 31, pp. 132, 141 et seq. 
State Papers, Vol. 32, p. 791 et seq. 
Hertslet, Vol 1, No. 39, p. 258 et seq. 
State Papers, Vol. 32, pp. 791-792. 
Hertslet, Vol. 1, No. 6, pp. 26-27, Art. 26. 
Ibid., Art. 27. 
Ibid, "Art. 28. 
Hertslet, Vol. 1, No. 7, p. 35 et seq. 
10. Hertslet, Vol. A" No. oh p. 41 et seq. 
11. Hertslet, Vol. 1: No. 7, pp. 36-40, 41 et seq. 
12; Hertslet, Vol. {i No. 40, pp. 269 “286. 
13. Hertslet, Vol. ft) No. ‘41, p. 286, Nov. 24, 1858; State 
Papers, Vol. 51, pp. 654, 662. 
14. Hertslet, Vol. 1, No. 95, pp. 552-553. 
15) Hertslet, Vo: No. 81, p. 457, Art. 4, Treaty of June 13, 


16. Hertslet, Vol. 1, No. 26, p. 123 et seq. 

17. Hertslet, Vol. 1, No. 27, p. 148 et at 

18. Hertslet, Vol. 1, No. 28, p. 174. 

19. Hertslet, Vol. 1, No. 28, p. 180. 

20. Hertslet, Vol. 1, No: 100, pp. 566, 568, Art. 4. 

21. Hertslet, Vol. 1, No. 66, p. 384, Art. 1. 

22. MacMurray, 1917/7. 

23. China Year Book, 1919, p. 422. 

rap W. W. Willoughby, Foreign Rights and Interests in China, 
p. 119, 

24A. Morse, The Trade and Administration of China, p. 367. 

25. Hertslet, Vol. 1, No. 7, pp. 39-40. 

26. MacMurray, 1898/2. 

27. Hertslet, Vol. 1, No. 6, p. 32, Art. 45, Treaty of June 26, 
1858; also No. 12, p. 79, Chefoo Agreement, Sept. 13, 1876, Sec. 
3, Clause 5; No. 28, p. 171, Art. 1, Treaty of Sept. 5, 1902. 

28. Hertslet, Vol. 2, No. 124, p. 634, Sec. 3, Art. 1. 

28A. Hertslet, Vol. 1, No. 6, pp. 27-28, Art. 28, Treaty of 
June 26, 1858; No. 7, p. 38, Rule 7, Agreement of Nov. 8, 1858; 
No. 28, p. 174 et seq., Art. 8, Treaty of Sept. 5, 1902. 

29. Hertslet, Vol. 1, No. 26, p. 128, Art. 6, Final Protocol of 
Sept. 7, 1901. 

30. The Shantung Question, presented by China to the Paris 
Peace Conference, published by the Chinese National Welfare 
Society of America, 1920, p. 87. 

31. Ibid., p. 87. 


CPP ore he 


TARIFF AUTONOMY 385 


32. Chin Chu, The Tariff Problem in China, pp. 86-88. 

33. The Shantung Question, op. cit., pp. 88-89. 

34. Ibid., p. 89. 

35, Treaty of Peace with Austria, Sup. of American Journal 
of Int. Law, Jan. and April, 1920; Treaty of Peace with Hun- 
ne Aone 4, 1920, The American Journal of International Law, 

all.; ; 


PAR IOV 


NEW PROBLEMS ARISING SINCE THE WAR 


XXIV. 
XXV. 


XXVI. 
XXVII. 


THe New INTERNATIONAL BANKING CON- 
SORTIUM. 


THe New INTERNATIONAL BANKING CON- 
SORTIUM (Continued). 


THE LEAGUE oF NATIONS AND CHINA. 


THE SHANTUNG QUESTION. 


XXIV 


THE NEW INTERNATIONAL BANKING 
CONSORTIUM 


Ir there is any factor destined to affect the foreign re- 
lations of China in the next decade or so, it is the New 
International Banking Consortium. From a_ business 
point of view, it is nothing more than an international 
combine of the banking groups of the United States, Great 
Britain, France, and Japan, for the purpose of coopera- 
tive investment in China; but from the viewpoint of his- 
tory and the political situation in the Far East, it signifies 
more than mere business, and is pregnant with tremen- 
dous political potentialities. 

The new consortium is not a novel invention; it has 
its predecessor. To recall what has been said, the old 
consortium was formed in 1908, consisting of the bankers 
of France, Great Britain, Germany, and the United States, 
which concluded the Hukuang Railway loan of May 20, 
1911.1. The same consortium also negotiated the cur- 
rency and industrial development loan of April 15, 1911.? 
Subsequently, this quadruple syndicate was expanded into 
a sextuple consortium, adding to its memmbership Russia 
and Japan, which, despite the withdrawal of the American 
group, concluded the Reorganization Loan of April 26, 
1913.2 With the advent of the World War, the sextuple 
consortium, which had been reduced to a quintuple group, 
passed into oblivion. 

To be brief, the formation of the new consortium dates 
from 1917, when a suggestion was made as to an Amer- 
ican Loan to China so that the latter could be equipped 
for an effective participation in the World War. In 
June of 1918, the Department of State called together 

389 


390 PROBLEMS ARISING SINCE THE WAR 


a number of American bankers interested in Chinese 
finance. As an outcome of the conference, it was decided 
that in addition to the American Group of Bankers, the 
United States Government would request the govern- 
ments of Great Britain, France, and Japan, to organize 
their respective banking groups and participate in the 
new consortium, on the basis of full equality and partner- 
ship. Accepting the principles of the American proposal, 
representatives of the Allied Powers concerned met at 
the Paris Peace Conference on May 11 and 12, 1919, 
when several resolutions were passed and an agreement 
was reached. Upon approval of the governments con- 
cerned, the representatives of these banking groups met 
in New York City in October, 1920, and signed the agree- 
ment. 


To be more specific, the formation of the new con- 
sortium is a long story, and marked by several diplomatic 
events of great political significance. The beginning of 
the project goes back to the month of June, 1918, when 
the State Department called together the American 
bankers interested and experienced in Chinese finance. 
At the conference, the project of loaning to China and 
the best way of doing so were discussed. On July 8, 
1918, the banking firms interested (J. P. Morgan & Co., 
Kuhn, Loeb & Co., The National City Bank of New 
York, the First National Bank, New York, the Chase 
National Bank, the Continental and Commercial Trust & 
Savings Bank of Chicago, Lee Hegginson & Co., and 
the Guaranty Trust Commpany of New York), informed 
the Department of State that in their opinion a consortium 
of the banking interests of the four Powers—the United 
States, Great Britain, France and Japan—should be 
formed, that one of the conditions of membership should 
be the relinquishment of existing or future options, and 
that in case of a loan issue, the Department of State 
should make a declaration announcing that the loan was 


THE NEW BANKING CONSORTIUM _ 391 


to be made at the suggestion of the Government.* In 
response to this communication, the Department of State 
replied, on July 9, 1918, that it would comply with the 
wishes of the American Bankers.** 

As a fuller statement, the Department of State gave to 
the press on July 29, 1918, the statement which we have 
quoted:in the chapter on The Policy of the United States 
in China, setting forth the essential features of the new 


policy.® 


(1) The formation of a group of American bankers. 

(2) The codperation of the bankers with the Depart- 
ment of State, particularly with reference to policies. 

(3) The approval by the Department of State of the 


names of banks composing the group. 
(4) Approval of the terms and conditions of the loans 


by the Department of State. 

(5) Diplomatic support in the execution of equitable 
contracts. 

(6) The formation of the national banking groups of 
Great Britain, France and Japan and their association 
with the American group. 


Meanwhile, the Department of State entered into nego- 
tiation with the Governments of Great Britain, France 
and Japan. On August 14, 1918, the British Foreign 
Office asked for an elucidation of the scope of the new 
consortium; whether the contemplated loan was to be a 
second or supplementary Reorganization Loan or an 
entirely different one; whether it was to include only 
administrative loans or also industrial and railway loans, 
the latter of which were excluded from the scope of the 
former consortium by the intergroup agreement of Paris, 
September 26, 1913; whether the relinquishment of op- 
tions was to include only the options on administrative 
loans or also on industrial in which case the British Gov- 
ernment feared to concur until they should have consulted 
the British interests involved; and finally, whether the 


392 PROBLEMS ARISING SINCE THE WAR 


policy of maintaining the political independence and sov- 
ereignty of China was to preclude any possibility of 
foreign supervision in collection of revenues pledged as 
securities and the employment of foreign advisers to 
supervise the introduction of reforms.® In reply, the 
Department of State, on October 8, 1918, despatched a 
memorandum covered by a note, to the French, British 
and Japanese Embassies explaining that it was not the 
intention of the United States Government to rejoin the 
old consortium, but that a new one was to be organized; 
that the relinquishment of options was to cover all options 
of whatever nature; that the loans were to include both 
administrative and industrial loans; and that the policy 
of maintaining the political integrity and sovereignty of 
China did not preclude the possibility of foreign super- 
vision in the collection of revenues pledged as securities 
and the employment of a foreign adviser as prescribed 
in the terms of the loan.” 

On March 17, 1919, the British Foreign Office accepted 
the proposals of the United States Government for a 
new consortium, setting forth as their understanding that 
the formation of the four Power group should not preju- 
dice the claims of Belgium and Russia, that financial 
operation not involving a Chinese Government guarantee 
or a public issue should remain open to all, that “the 
groups will pool all existing and future options except 
such concession as may be already in operation,” that 
each national group will receive the active and exclusive 
diplomatic support of its government, and further adding 
that the contracts for the execution of the engineering or 
other works to be built out of the proceeds of the loan 
and for the supply of the necessary materials should be 
put up to public tender and that the loans to be made in 
the immediate future, in view of the dire need for re- 
construction in consequence of the World War, should 
be of moderate dimensions.*® 

On May 11-12, 1919, the representatives of the bank- 


THE NEW BANKING CONSORTIUM = 393 


ing groups of Great Britain, France, Japan and the United 
States with the sanction of their respective governments, 
met at the Paris Peace Conference for the purpose of 
organizing the new consortium. A set of resolutions was 
unanimously adopted and submitted to the four govern- 
ments concerned for approval. On May 31, 1919, the 
United States Government, in a note to the French, Brit- 
ish and Japanese Embassies announced its acceptance and 
approval of the resolutions and at the same time urged 
the other governments to give similar confirmation, “in 
order that the formation of the new consortium may be 
completed, prior to the expiration of the old consortium 
agreement on June 18, next.” ® 

On June 7, 1919, the British Foreign Office signified 
its acceptance and approval of the resolutions with the 
exception, however, to “the statement in the preamble of 
the agreement that the groups are entitled to the exclu- 
‘sive support of their respective Governments,” giving as 
its reason that the British Group “have hitherto failed to 
comply with the conditions on which alone His Majesty’s 
Government are prepared to guarantee exclusive official 
support.” 7° In view of this exception of the British For- 
eign Office, at the suggestion of the French Government, 
the formula regarding diplomatic support was slightly 
modified, the principal change being “in pledging each 
government to the support of its respective national group 
rather than to the consortium collectively.” The modified 
form which was communicated, on July 3, 1918, to the 
French, Japanese and British Embassies, reads as fol- 
lows :”’ 74 


“The governments of each of the four participating 
groups undertake to give their complete support to their 
respective national groups members of the consortium in 
all operations undertaken pursuant to the resolutions and 
agreements of the 11th and 12th of May, 1919, respec- 
tively, entered into by the bankers of Paris. In the event 


394. PROBLEMS ARISING SINCE THE WAR 


of competition in obtaining of any specific loan contract 
the collective support of the diplomatic representatives 
in Peking of the four governments will be assured to the 
consortium for the purpose of obtaining such contract.” 


On July 17, 1919, the British Foreign Office accepted 


the American formula. 


On June 18, 1919, Mr. Odagiri of the Yokohama Specie 
Bank communicated with Mr. Thomas W. Lamont of J. 
P. Morgan & Company, setting forth the Japanese reser- 
vation of Manchuria and Mongolia from the scope of 
the new consortium, claiming special interests therein 
arising from historical and geographical relations and cit- 
ing as a precedent the same Japanese reservation made at 
a meeting of the Six Power Groups held at Paris on 
June 18, 1912. A similar communication, mutatis mutan- 
dis, was dispatched to the representatives of the British 
and French Groups. His letter follows: 


“With reference to our interview in Paris, and Mr. 
Tatsumi’s conversation with you on the 16th instant in 
connection with the proposed new consortium for Chinese 
business, for your information I would wish to communi- 
cate to you that we have been instructed by our principals 
in Japan that all the rights and options held by Japan in 
the regions of Manchuria and Mongolia, where Japan 
has special interests, should be excluded from the ar- 
rangements for pooling provided for in the proposed 
agreement. This is based on the very special relations 
which Japan enjoys geographically, and historically, with 
the regions referred to, and which have been recognized 
by Great Britain, the United States, France and Russia 
on many occasions. In this connection I would wish to 
specially draw your attention to a Note from the Secre- 
tary of State to the Japanese Ambassador, dated, Wash- 
ington, November 2nd, 1917. 

“Furthermore the following matter which was dealt 
with under the present Group Agreement, was reserved 


THE NEW BANKING CONSORTIUM = 395 


by the Japanese Group at the time of signature of the 
Chinese Reorganization Loan Agreement. 

“On the 18th of June, 1912, at a meeting of the Six 
Groups held in Paris, when discussing the agreement for 
the Chinese Reorganization Loan about to be issued, the 
following declaration was made by Mr. Takeuchi on be- 
half of the Japanese Group and was recorded in the min- 
utes of the conference: 

“The Japanese Bank declared that it takes part in the 
loan on the understanding that nothing connected with 
the projected loan should operate to the prejudice of the 
special rights and interests of Japan in the regions of 
South Manchuria and of the Eastern portion of Inner 
Mongolia adjacent to South Manchuria.” 


On June 23, 1919, Mr. Lamont acknowledged the re- 
ceipt of the letter, but in a firm tone rejected the reserva- 
tion. “Mongolia and Manchuria,” he said,” are import- 
ant parts of China, and any attempt to exclude them from 
the scope of the Consortium must be inadmissable.” At 
the same time he informed the Japanese representative 
that he would refer the question to the Department of 
State, it being “beyond the immediate competence of 
the financial group to discuss.” In refutation of the pre- 
cedent cited by Mr. Odagiri respecting the previous reser- 
vation made on June 18, 1912, he observed that the Brit- 
ish, German, French and American Groups had not ac- 
cepted the reservation at the conference of that date. 
“For your information I beg to recall to you that at the 
same time there was recorded in the minutes of the con- 
ference the following declaration: ‘The British, French, 
German and American Groups stated that they were un- 
able to accept or consider either of these declarations 
upon the ground that they were not competent to deal 
with political questions.’ ” 1* 

Its attention having been called to the Japanese reser- 
vation, the Department of State expressed its views, on 
July 30, 1919, politely declining to entertain the special 


306 PROBLEMS ARISING SINCE THE WAR 


reservation of Japan. “Reservations of regions can only 
impair its (the consortium’s) usefulness as an instrument 
for good, and limitations on its activity can only detract 
from its utility as a means for promoting international 
codperation among those most interested in China. More- 
over, as all the other parties in the arrangement have 
agreed to pool their rights and options without other reser- 
vation than that contained in the terms of the agreement 
itself, it is only equitable that the same rule should apply 
to all alike,;* ** 

Meantime, on August 11, 1919, the British Foreign Of- 
fice called the attention of the Japanese Government to 
the fact that her special reservation would be contrary to 
the principle of the new consortium and would tend to 
give Japan a preferred and special status in the consor- 
tium.*® 


In response, the Japanese Government, on August 27, 
1919, accepted the resolutions adopted at the Paris Peace 
Conference in May, 1919, but still insisted on the reser- 
vation of South Manchuria and Eastern Inner Mongolia 
from the scope of the new consortium with this modifi- 
cation, however, that Manchuria and Mongolia had been 
changed to South Manchuria and Eastern Inner Mongolia, 
thus limiting the area of Japan’s special interest. The 
note follows: 7° 


“The Japanese Government accept and confirm the 
resolution adopted at the meeting of the representatives 
of the bankers groups of the United States, Great Britain, 
France and Japan at Paris on May 11 and 12, 1919, for 
the purpose of organizing an international consortium for 
financial business in China; provided, however, that the 
acceptance and confirmation of the said resolution shall 
not be held or construed to operate to the prejudice of 
the special rights and interests possessed by Japan in 
South Manchuria and Eastern Inner Mongolia.” 


THE NEW BANKING CONSORTIUM — 397 


In response, on October 28, 1919, the Department of 
State declared that such a measure would revive the 
doctrine of the sphere of influence even in a worse form 
than was followed during the days when China was on 
the brink of disintegration, but assured the Japanese Gov- 
ernment that the vested interests and even the extension 
thereof in these regions would be excluded from the 
scope of the consortium.1? 

Similarly, echoing the sentiment of the United States 
Government, the British Foreign Office, on November 20, 
1919, notified the Japanese Government that her reserva- 
tion, based as it was on territorial claims, would be con- 
trary to the principle of the new consortium to abolish 
the sphere of influence, and to open the whole of China 
to world commerce. Further, while assuring Japan that 
vested interests, including railways in South Manchuria, 
would be exempt from the operation of the new consor- 
tium, it pointed out that inasmuch as Japan had not as 
yet established any vested interests in Eastern Inner Mon- 
golia, though holding options therein for railways, and 
especially in view of the strategic location of Eastern 
Inner Mongolia in relation to Peking, whose southern 
boundaries extended and practically envelop the capital 
of China, the reservation of such a sphere of influence 
would be irreconcilable with the principle of the main- 
tenance of China’s independence and territorial integrity. 
It concluded with the friendly suggestion that Japan 
should give prompt attention to the situation, “in view 
of the disastrous situation on the verge of which China 
appears now to find herself,” hinting apparently at the 
possible insolvency of China.1™ 


Called forth by the remonstrances of the United States 
and Great Britain, Japan, on March 2, 1920—after a 
silence of about six months—once more reéenforced her 
insistence on the reservation by the argument of national 
defense, contending that South Manchuria and Eastern 


398 PROBLEMS ARISING SINCE THE WAR 


Inner Mongolia, located as they are, are vital to Japan's 
national defense and economic existence, especially in 
view of the growing menace of the Russian situation in 
Siberia, and meanwhile offering instead a revised formula 
of reservation retaining to Japan the power of veto, or 
freedom of action, in case of loans affecting South Man- 
churia and Eastern Inner Mongolia calculated to menace 
the economic life and national defense of Japan, and 
giving a list of Japanese railways in South Manchuria 
which are to be excluded from the control of the con- 
sortium.’® A similar communication was handed to the 
British Foreign Office on March 16, 1920.*° 


Meanwhile, to disentangle the situation, at the request 
of the American Banking Group, and with the approval 
of the Department of State and of the British and French 
Banking groups, Mr. Lamont had sailed for the Far 
East and was in Japan throughout the month of March, 
1920, and conducted negotiations in person with the 
Japanese Government.?®? While Mr. Lamont was in Japan, 
the Department of State, on March 16, 1920, once more 
uttered the remonstrance that in view of the general 
recognition accorded to the right of national self-preser- 
vation, and further of the Lansing-Ishii Agreement of 
September 2, 1917, there was no real necessity even for 
a reservation under the form of the revised formula. At 
the same time, it pointed out the inconsistency of includ- 
ing in the reserved list the projected line from Taonanfu 
to Jehol, and thence to the coast, which is not essential 
to the national safety or economic existence of Japan.** 

Likewise, on March 19, 1920, Earl Curzon responded 
to Viscount Chinda, rejecting the revised formula as be- 
ing “so ambiguous and general in character that it might 
be held to indicate on the part of the Japanese Govern- 
ment a continued desire to exclude the cooperation of 
the other three banking groups for participating in the 
development, for China’s benefit, of important parts of 


THE NEW BANKING CONSORTIUM = 399 


the Chinese Republic,” and declining to believe that “it 
is essential for Japan alone to construct and control, for 
instance, the three railway lines mentioned in the third 
reservation lying to the west of South Manchuria Rail- 
way, and finally pledging the assurance that the Japan- 
ese Government need have no reason to apprehend that 
the consortium would direct any activity affecting the 
economic security and national defense of Japan.” 21 


In view of the persistent opposition of the United 
States and Great Britain, Japan yielded. Relying upon 
their assurances, she relinquished the request for the ac- 
ceptance of the revised formula, on condition that the 
other Powers should give similar assurance. Respecting 
the railway from Tannanfu to Jehol and thence to a sea- 
port, while admitting that it was projected “with the 
strategic object of making it a means of common de- 
-fense on the part of China and Japan against foreign in- 
vasion coming from the direction of Ourga,” Japan like- 
_ wise yielded and assented to the inclusion of the line or 
lines in Mongolia within the operation of the new con- 
sortium. In relinquishing the concession, however, she 
attached two conditions which she asked the Powers con- 
cerned to accept.?? A similar despatch was sent to the 
British Foreign Office on April 14, 1920.??4 


(1) In the event of the new consortium projecting in 
future a scheme of extending the Taonanfu-Jehol railway 
to the north with a view to connection with the Eastern 
Chinese Railway, the assent of the Japanese Government 
thereto must be obtained beforehand through the Japan- 
ese group, inasmuch as such an extension being tanta- 
mount to a renewal of the so-called Chinchou-Aigun rail- 
way scheme against which a protest was lodged by Japan 
when the question was motioned some years ago, is cal- 
culated to have a serious effect upon the South Manchuria 
Railway. 

(2) In consideration of the particular desire of Japan 


400 PROBLEMS ARISING SINCE THE WAR 


that these two lines should be built as speedily as possible, 
the Japanese group, after due consultation with the other 
groups, may be permitted to undertake their construction 
single handed in the event of the other three Powers as- 
sociated in the new Consortium being reluctant to finance 
it. In that case, having regard to the fact that these rail- 
ways must cross the Peking-Mukden Railway at a cer- 
tain point, the American group will give their support to 
the overture which the Japanese financiers will make to 
their British colleagues with a view to perfecting the 
junction of these lines.” 


Regarding the two conditions, Earl Curzon replied, on 
April 28, 1920, counseling the Japanese Foreign Office 
to forego the conditions and be satisfied with the general 
assurance as given above, for “granting to any one party 
to the consortium the power to veto in advance the pos- 
sible construction of a railway would appear to be con- 
trary to the principles upon which the idea of the con- 
sortium is based,” and because the second condition 
would be included in the articles of the Inter-Group 
Agreement of May 12, 1919. At the same time he 
withdrew the objection of the British Government to the 
exclusion from the consortium of the two projected lines 
from Tannanfu to Changchun and from Taonanfu to 
Chengkiatun.?* In the same way, the Department of 
State, on April 29, 1917—one day after the British an- 
swer—treplied that the first condition of retaining the veto 
power would be contrary to the principles of the consor- 
tium and the second condition “would appear to be 
already provided for in Article IV of the Inter-Group 
Agreement at Paris on May 12th, paragraph 19, of which 
the American Government has expressed its approval.” ** 

{ 

In view of this determined resistance, on May 8, 1920, 
Japan yielded, this time completely. She waived the two 
conditions as above set forth, and consented to enter the 
consortium without any reservation or condition.2° A 


THE NEW BANKING CONSORTIUM 401 


similar note was likewise despatched to the British For- 
eign Office on May 11, 1920.28 On May 8, 1920, the De- 
partment of State expressed its gratification at the with- 
drawal of all conditions and reservations by Japan and 
its expectation—‘‘that such practical joint endeavor is 
the beginning of a new era of good will and accom- 
plishment for both governments.” ?* Similarly on May 
17, 1920, the British Foreign Office expressed its gratifi- 
cation, and reiterated the assurance.?® 

On May 25, 1920, the much belated word came from 
the French Government pledging to observe the same 
general assurance as given by the American Govern- 
ment.”° 

Meanwhile, Mr. Lamont had already reached a com- 
promise at Tokio, which consisted of transferring to the 
Consortium the line from Taonanfu to Jehol and another 
line from any point on the Taonanfu-Jehol Railway 
to a seaport and of excluding the other railways as 
enumerated below from the scope of the consortium. On 
her part, Japan engaged to withdraw all reservations in 
toto. This compromise was embodied in an exchange of 
letters on May 11, 1920, as follows: *° 


_N. Kajiwara to T. W. Lamont, May 11, 1920. 


“We have now the honor to inform you that certain 
points in the Agreement and in the operations of the pro- 
posed consortium, hitherto somewhat obscure, having 
been cleared up to the satisfaction of our Government 
and of ourselves; we are now able in accordance with 
the instructions of the Japanese Government to withdraw 
our letter dated 18th June last and announce that, con- 
jointly with the American, British and French Banking 
Groups and on like terms with them, we will accept the 
consortium agreement. We beg at the same time to ex- 
press our hearty concurrence with the general ideas and 
objects-of the consortium in respect to China.” 


T. W. Lamont to N. Kajiwara, May 11, 1920. 


402 PROBLEMS ARISING SINCE THE: WAR 


“We beg to acknowledge with thanks, the receipt of 
your communication of May 11th, 1920, informing us, 
in behalf of the Japanese Banking Group that, under the 
instructions of your Government, you have now with- 
drawn your letter dated June 18th, 1919, and have 
adopted, in association with the Banking Groups of 
America, Great Britain and France and on like terms 
with them, the agreement for the establishment of a New 
Consortium in respect to China. 


“Tnasmuch as some questions have arisen during our 
discussions as to the status of specific railway enter- 
prises contemplated or actually begun in Manchuria and 
Mongolia, we hereby confirm that we have agreed with 
you as follows: 


“(1) That the South Manchurian Railway and its 
present branches, together with the mines which are sub- 
sidiary to the railway, do not come within the scope of 
the consortium ; 

“(2) that the projected Taonanfu-Jehol Railway and 
the projected railway connecting a point on the Taonan- 
fu-Jehol Railway with a seaport are to be included within 
the terms of the Consortium Agreement ; 

“(3) that the Kirin-Huining, the Chengchiatun-Taon- 
anfu, the Changchun-Taonanfu, the Kaiyuan-Kirin (via 
Hailung), the Kirin-Changchun, the Sinminfu-Moukden 
and the Supingkai-Chengchiatun Railways are outside 
the scope of the joint activities of the consortium. 


“The foregoing letter of acknowledgment, although 
written in behalf of the American Banking Group, has, 
we are assured, the cordial approval of the British and 
French Banking Groups, also of the Governments of the 
United States, of Great Britain and of France.” 


Having thus smoothed the way by the compromise, the 
representatives of the four national banking groups met 
in New York City in October, 1920. At the conference, 
the application of the Belgian Banking Group was ac- 


THE NEW BANKING CONSORTIUM = 403 


cepted, subject to the approval of the four governments 
already involved. The suggestion was also favorably 
entertained of welcoming a Chinese National Banking 
Group, provided such a unit should be formed in China. 
It was further agreed to inquire of the Chinese Govern- 
ment as to the possible measures to be taken to render 
assistance to the currency reform of China. Respecting 
the German-issued bonds of the Hukuang Railway Loan 
of 1911, the interest charges of which the Chinese Gov- 
ernment had withheld, the conference resolved to ask the 
Chinese Government to recognize these bonds just as the 
other bonds of the entire issue. Particular attention was 
also given to the new railways, improved methods of com- 
munication, the purchase of materials, standardization of 
railway equipments, etc. ; 

On October 15, 1920, the Consortium agreement was 
signed, and the New Consortium was formally organized. 


NOTES TO CHAPTER XXIV 


1, MacMurray, 1911/5. 

2. MacMurray, 1911/2. 

3. MacMurray, 1913/5. 

4. Documents Concerning the New Consortium, released to 
press by the Department of State, March 30, 1921, Am. Bankers 
to Dept. of State, July 8, 1918. 

4A. Ibid., Department’s Letter of July 9, 1918, to the Bankers. 

5. N. Y. Times, July 30, 1918. 

6. Documents Concerning the New Consortium, British For. 
Office to American Embassy, London, Aug. 14, 1918. 

7. Ibid., Department's Note and Memorandum to the French, 
British and Japanese Embassies, Oct. 8, 1918. 

8. Ibid. British For. Office to American Embassy, London, 
March 17, 1919. 

9. Ibid., Department’s Note of May 31, 1919, to the French, 
British and Japanese Embassies. 

10. Ibid., British Embassy, Washington, to the Department of 
State, June 7, 1919. 

11. Ibid., Department’s Note of July 3, to French, Japanese 
and British Embassies, setting forth the degree of diplomatic 
support to be accorded to the Consortium. 

12, Ibid., British For. Office to American Embassy, London, 
July 17, 1919, 


' 404 PROBLEMS ARISING SINCE THE WAR 


13. Ibid., Letter from Mr. Thomas W. Lamont to Mr. M. 
Odagiri, dated June 23, 1919. 

14. Ibid., Memorandum of the Dept. of State to the Japanese 
Embassy, July 30, 1919. 

15. Ibid., Memorandum of the British For. Office, Aug. 11, 
1919, 

16. Ibid., Imperial Japanese Embassy, Washington, Aug. 27, 
1919. 

17. Ibid., Dept.’s Reply, Oct, 28, 1919, to the Memorandum of 
the Japanese Embassy, dated August 27, 1919. 

17A. Ibid., Earl Curzon’s Memorandum to the Japanese Am- 
bassador, Nov. 20, 1919. 

18. Ibid., Memo. of Imperial Japanese Embassy, Wash., Mch. 
2, 1920. 

19. Ibid., Memo. left with Lord Curzon by the Japanese Am- 
bassador, Mch. 16, 1920. 

20. Thomas W. Lamont, Preliminary Report on the New Con- 
sortium for China, p. 8. 

21. Documents, op. cit., Dept.’s Memo., Mch. 16, 1920, to the 
Japanese Embassy in reply to the Japanese Memo. of Mch. 2. 

21A. Ibid., Earl Curzon to Viscount Chinda, Mch. 19, 1920. 
fen Ibid., Imperial Japanese Embassy, Washington, Apr. 3, 
920. 

22A. Ibid., Memo. left with Sir Eyre Crowe by the Japanese 
Ambassador, April 14, 1920. 

23. Ibid., Earl Curzon to Viscount Chinda, Apr. 28, 1920. 

24. Ibid., Dept.’s Reply, Apr. 29, 1920, to the Memorandum 
from the Japanese Embassy of Apr. 3, 1920. 

25. Ibid., Imperial Japanese Embassy, Washington, May 8, 


26. Ibid., Memorandum Communicated by Japanese Embassy 
to British Foreign Office, May 11, 1920. 

27. Ibid., Dept.’s Reply to the Note of the Japanese Embassy, 
May 8, 1920. 

28. Ibid.. Memorandum Communicated to Japanese Embassy 
by British For. Office, May 17, 1920. 

29. Ibid., French Gov’t to Japanese Emb., May 25, 1920. 

30. Ibid., Letter to Mr. Thomas W. Lamont from Mr. N. 
Kajiwara, dated May 11, 1920; letter from Mr. Thomas W. 
Lamont to Mr. N. Kajiwara, May 11, 1920; also cf. Millard’s 
Review, Oct. 23, 1920. 


XXV 


THE NEW INTERNATIONAL BANKING 
CONSORTIUM (cont.) 


THE constitution of the New Consortium is found in 
the agreement of October 15, 1920.1. The purposes are 
to negotiate and carry out Chinese loan business and to 
supply the Chinese Government with the necessary capi- 
tal for economic reconstruction and improved communi- 
cations. They are embodied in the Preamble of the 
Agreement as follows: 


“And whereas the British, French, Japanese and 
American Groups were formed with the object of nego- 
tiating and carrying out Chinese loan business 


“And whereas the said national groups are of the 
opinion that the interests of the Chinese people can 
in existing circumstances best be served by the coopera- 
tive action of the various banking groups representing 
the investment interests of their respective countries in 
procuring for the Chinese Government the capital neces- 
sary for a program of economic reconstruction and 
improved communications.” 


The requisites of the Consortium to operate in China 
are the diplomatic support given by each Government 
interested to their respective national banking groups, 
and in case of competition in contracts, to the Con- 
sortium as a whole, as set forth in the Preamble: 


“And whereas their respective Governments have un- 
dertaken to give their complete support to their respec- 
tive national groups the parties hereto in all operations 

405 


406 PROBLEMS ARISING SINCE THE WAR 


undertaken pursuant to the agreement hereinafter con- 
tained and have further undertaken that in the event of 
competition in the obtaining of any specific loan contract 
the collective support of the diplomatic representatives 
in Peking of the four Governments will be assured to 
the parties hereto for the purpose of obtaining such 
contract. 


e e 


The membership in the New Consortium is limited to 
the National Banking Groups. The admission of a new 
National Banking Group requires the unanimous consent 
of the parties, subject to the approval of their respec- 
tive Governments. Each National Banking Group pos- 
sesses the right to increase or decrease its own mem- 
bership, but shall not admit, without the consent of the 
other Groups, any new member that does not belong 
to the nationality of the Banking Group and domiciled 
in its market, and shall bind the withdrawing member 
to the observance of the restrictive provisions of the 
Consortium and the incoming member to abide by the 
same (Article 1). 


The scope of the New Consortium does not include 
the vested interests nor the existing agreements as to 
industrial undertakings in which substantial progress can 
be shown to have been made, nor does it aim to invade 
the domain of private enterprises in banking, industry 
or commerce. It covers, rather, the existing loans in 
which no substantial progress has been as yet made, and 
all future loans, administrative, political, industrial, and 
financial, to be made to the Chinese Government or any 
province. To be more specific, it aims “to include within 
its scope only those basic transportation systems, high- 
ways, reorganization of the currency, etc., which would 
serve to establish sounder economic conditions through- 
out China and thus form a firmer foundation for the 
encouragement of private initiative and trade.”? Arti- 


THE NEW BANKING CONSORTIUM 407 


cle 2 of the agreement sets forth the scope of the Con- 
sortium as follows: 


“This agreement relates to existing and future loan 
agreements which involve the issue for subscription by 
the public of loans to the Chinese Government or to 
Chinese Government Departments or to Provinces of 
China or to companies or corporations owned or con- 
trolled by or on behalf of the Chinese Government or to 
any party if the transaction in question is guaranteed 
by the Chinese Government or Chinese Provincial Gov- 
ernments but does not relate to agreements for loans to 
be floated in China. Existing agreements relating to in- 
dustrial undertakings upon which it can be shown that 
substantial progress has been made may be omitted from 
the scope of this agreement.” 


At the same time, however, it was mutually agreed 
_that the existing agreements or future loan agreements 
within the scope of the Consortium should be subject to 
the provisions of the Consortium Agreement (Arti- 
cles). 

The rights and the duties of the constituent groups 
are defined on the principle of complete equality. That 
is to say, every group enjoys the same rights and carries 
the same obligations as the other. To be more specific, 
equal rights are accorded to all in all operations, the 
signing of contracts, the equal sharing in existing agree- 
ments and future contracts, and in the liberty to decline 
participation. On the other hand, equal obligations are 
placed upon all groups for expenses connected with any 
business, for preliminary advances in any transaction, 
excepting stamp duties and the profits and losses of each 
group in their operations (Article 4). 


Respecting liability, each group is to liquidate its own 
liabilities, disclaiming any responsibility for joint lia- 
bility. Furthermore, each group is to realize its own 
profits within its own market, on the understanding, 


408 PROBLEMS ARISING SINCE THE WAR 


however, that the issues in each market are to be made 
at substantial parity (Article 5). 


Inasmuch as it is quite possible and probable that, in 
consequence of war, the groups will not be able to share 
the loans equally, in view of the needs for reconstruc- 
tion in Great Britain and France, but must be com- 
pelled to allow the group or groups, meaning particu- 
larly the American group, to assume the greater share 
of the burden, it is therefore provided that the party 
or parties unable to take an equal share of the burden 
allotted or entitled can ask, in writing, the other party or 
parties who are competent and willing to make the ad- 
ditional issue for their account, which is known as “the 
Residuary Participation” (Article 6). 


As the system of Residuary Participation is liable to 
be abused and thus to imperil the interests of the other 
parties, rigid conditions are stipulated to safeguard the 
proper operation of the system. Notice of such Residu- 
ary Participation must be given and received prior to 
the execution of the agreement. The party so requested 
is to be free to decide the apportionment of the addi- 
tional issue among its own members, or else they shall 
share them equally among themselves. The issues in 
pursuance of Residuary Participation shall be placed on 
a parity with the regular issue. The party issuing the 
Residuary Participation shall be free to decide upon the 
expenses in connection with its flotation. It is entitled 
to a commission of not more than one and one-half per 
cent of the nominal amount of the Residuary Participa- 
tion and to charge the party or parties making the re- 
quest for expenses in connection with the issuance, these 
to be calculated in accordance with the proportion which 
the Residuary Participation bears to the entire issue. It 
is not required to subscribe thereto, nor to cause others 
to do likewise. It shall ‘apply all subscriptions received 


THE NEW BANKING CONSORTIUM — 409 


by it pro rata between the Residuary Participation by it 
and the amount issued by such party on its own ac- 
count.” It shall “use its best endeavors to obtain a 
quotation on its own market for the total amount issued 
by it.” Mutual agreement of the parties making the re- 
quest and those requested is necessary to any issue of 
Residuary Participation. 

Each party enjoys exclusive control of its own market 
as far as the issuance of the bonds is concerned. No 
participation can be given to any outside its own mar- 
ket (Article 7). 


The duration of the New Consortium is fixed at five 
years—that is, 1920 to 1925—but subject to this con- 
dition, that the majority of the parties can determine 
its duration at any time by giving twelve months’ notice 
in writing to the other parties concerned, which means 
that the majority of the parties can terminate, or 
shorten, or lengthen, the period of duration at will 
(Article 8). 


Such being the Constitution of the New Consortium, 
let us now observe its dealings with the Chinese Govern- 
ment, so far as they have been made known to the pub- 
lic. On September 28, 1920, before the Conference in 
New York City in October, 1920, the American, British, 
French and Japanese Legations at Peking despatched a 
joint note to the Chinese Foreign Office,* informing the 
latter of the formation of the New Consortium, setting 
forth its purposes, scope, and the amount of diplomatic 
support the respective Governments are pledged to give, 
together with a collection of documents dealing with the 
negotiations for the formation of the New Consortium, 
and ending with the wish, “for the early consummation 
of a united Government in China so that the New Con- 
sortium may eventually be enabled to give practical ex- 
pression to the desires of the four Governments con- 


410 PROBLEMS ARISING SINCE THE WAR 


cerned to assist in the future development of this coun- 
try.” 

On receipt’ of this note, informal conferences took 
place at the Chinese Ministry of Finance. Expressing 
the view of the Chinese people, although the note took 
the form of a personal opinion, Mr. Chow Tsu-chi, Chi- 
nese Minister of Finance, communicated to the repre- 
sentatives of the Consortium Banks on November 26, 
1920, as follows: + 


“In pursuance of our conversation at the Ministry of 
Finance on November 23, I deem it expedient, in order 
to remove any misunderstanding as to my personal atti- 
tude with regard to the Consortium, to set down the 
following points: 

“1, It is necessary that the Government of China 
should at this juncture secure financial aid for construc- 
tive purposes. 

“2. If the Government is compelled to resort to for- 
eign loans for this purpose (a) I personally cannot ad- 
vise that any agreement embodying conditions calculated 
to establish a financial monopoly should be signed with 
any bank or group of banks; nor (b) can I advise that 
any loan agreement be negotiated where the Land Tax 
of China should be set down as security and placed 
under foreign jurisdiction. 

“The Consortium has been formed with the object of 
assisting China in her reorganization. China, particu- 
larly myself, heartily welcomes such evidence of good 
will on the part of foreign financiers, but expects that 
it will be manifested in a manner that will leave no 
doubt in the minds of the people of China as to the 
motives which animate the foreign bankers and which 
will correct the impression now prevailing that their na- 
tional freedom is being mortgaged.” 


In reply, the representatives of the Banking Groups 
expressed their views as follows: * 


“At your Excellency’s request the general scheme of 
the Consortium for a comprehensive constructive loan 


THE NEW BANKING CONSORTIUM 411 


to China for productive purposes, such as the construc- 
tion of railways, was described, and the reasons for this 
policy, as well as for the fact that our instructions did 
not include the consideration of a loan for purely ad- 
ministrative purposes, were clearly explained. At the 
same time we communicated the conditions which in 
the opinion of the Consortium were absolutely necessary 
for the successful issue of any loan for China on the 
foreign markets, viz.: (1) the recognition of all Ger- 
man Bonds and Coupons of existing Chinese Govern- 
ment Railway Loans, and (2) the provision of a sepa- 
rate security in the case of future railway loans. We 
further answered Your Excellency’s inquiries regarding 
the present position of the Pacific Development Corpo- 
ration Contract, and the views of the Consortium on 
the question of taking over this agreement. It is there- 
fore necessary to state as clearly as possible that not 
only was no proposal mooted on behalf of the Con- 
-sortium which included ‘conditions calculated to estab- 
lish a financial monopoly,’ but also that during the inter- 
view no mention was made on either side of the Land 
Tax of China as a possible security for any loan to be 
made. . . 


“If, as stated by Your Excellency, it is possible that 
China can herself presently find the money necessary for 
her reorganization, the groups will learn with the great- 
est satisfaction of the success of her efforts in this direc- 
tion, and we are certain that she will have not only the 
entire sympathy, but, as far as possible, the codperation 
of the Consortium in her endeavors to achieve that 
end.” | 


In view of this protest, Mr. Chow Tsu-Chi made a 
polite retreat and answered that inasmuch as the New 
Consortium entertained no motive or intention of estab- 
lishing a financial monopoly or of obtaining the Land 
Tax as security, he was much gratified at the assurance. 

On January 13, 1921, the American, British, French 
and Japanese Legations sent another joint note to the 


412 PROBLEMS ARISING SINCE THE WAR 


Chinese Foreign Office informing the latter of the sign- 
ing of the Consortium Agreement on October 15, 1920, 
and of the full approval of the New International Asso- 
ciation by the four Powers interested. 


The significance of the New Consortium cannot be 
over-estimated. It is the physical embodiment of the 
policy of the Powers—the policy of international co- 
operation and control. It will be remembered that, with 
the realization of the evil consequences of cut-throat 
competition, the Powers have, since the Chinese Revo- 
lution of 1911, adopted the policy of international co- 
operation and control. In consequence, the old con- 
sortium was formed and contracted the loans for the 
Hukuang Railway and the Currency Reform of 1911, 
and the Reorganization Loan of 1913. Interrupted 
partly by the withdrawal of the American Group re- 
sulting in the loss of a moral leader within the Old Con- 
sortium, but largely by the interposition of the World 
War, which withdrew the struggling Powers from 
“their happy hunting ground” of the Far East to the 
ghastly arena of the European battlefields, this common 
policy was temporarily laid aside. As soon, however, 
as the World War was over, the Great Powers resumed 
the old policy, and hence the formation of the New 
Consortium. It can therefore be said that the New 
Consortium embodies and represents the policy of In- 
ternational Cooperation and Control during the present 
period of China’s history. 

Further, the New Consortium is a practical assertion 
of the Open Door Doctrine on the part of the United 
States. While respecting vested interests, it proposes, 
as far as possible, to demolish the walls of spheres of 
interest or influence. By pooling all existing options 
in which no substantial progress has been made and all 
future options, administrative, industrial or otherwise, 
and by offering to public tender the execution of engi- 


THE NEW BANKING CONSORTIUM = 413 


neering contracts and the purchase of materials, 1t estab- 
lishes a condition of true equality of trade which did 
not obtain under the old régime of international struggle 
for concessions, or under the doctrine of Closed Spheres. 
By mitigating the evils of spheres of interest or influ- 
ence, and by requiring the submission of all agreements 
to the approval of the Governments concerned, particu- 
larly the Department of State of the United States, it 
tends to maintain the political independence and the 
sovereignty of China. Hence it is the incarnation of 
the Open Door Doctrine. 

Moreover, the New Consortium aims to put into 
operation the new policy of the internationalization 
of Chinese railways. Asserting as it does the 
Open Door Doctrine which, as we recall, with respect 
to railways, must either adopt the principle of interna- 
tionalization, or exclude them entirely from the scope 
of its application,—because of the monopolistic nature 
of railways,—it cannot enter into the field of Chinese 
investment except in the path of the internationalization 
of these concessions. With the existing railways, already 
in operation or under construction, or in which sub- 
stantial progress has been made, it does not aim to 
interfere, except in so far as the Chinese Government 
or the Provinces desire to make an international loan 
to redeem the foreign railways, which, however, is con- 
ditioned upon the the consent of the New Consortium 
to assume the burden and upon the willing cooperation 
of the Powers owning and operating these railways. 
With existing railway concessions, in which little or no 
substantial progress has been made, and with all future 
railway concessions and other public and basic under- 
takings, such as Hukuang, Second Reorganization, Cur- 
rency Reform, Pukow-Sinyang, Nanking-Hunan, Jehol- 
Taonan, Tsinan-Shunteh, Kaomi-Hsuchow, Siems-Carey, 
Grand Canal, and so forth, it proposes to apply the 
policy of internationalization. Thus, what Secretary 


414 PROBLEMS ARISING SINCE THE WAR 


Knox hoped to carry out in his plan of the neutraliza- 
tion of Manchurian railways is now to be applied 
openly to all the railways of China to be constructed in 
future, and to all other public and basic undertakings, 
falling within the scope of the New Consortium. As 
to whether this policy of internationalization includes 
only international finance, or also international admin- 
istration and hence control, it remains to be seen in the 
contracts that are to be concluded. It is, however, to 
be hoped that the policy of internationalization will 
cover only international finance, and will not include 
international administration and control, which will in- 
fringe upon and impair the sovereignty of China. 

Furthermore, the New Consortium neutralizes Japan’s 
efforts to control China. Had it not been for the early 
formation of the New Consortium, as China tottered on 
the brink of bankruptcy, Japan, by repeated loans, might 
have this day fairly reached the goal of controlling 
China through finance. As it is, and especially as the 
Department of State and Thomas W. Lamont success- 
fully warded off Japan’s reservation as to South Man- 
churia and Eastern Inner Mongolia and brought her into 
the fold of the New Consortium without any reservation 
or condition, obligating Japan to observe the canons of 
the Consortium, it has definitely neutralized her efforts 
to control China, or at least, has placed an almost in- 
surmountable difficulty before Japan’s ambition in this 
direction. 

On the other hand, with the advent of the New Con- 
sortium, China is face to face with the moral crisis of 
choosing the right way at the parting of the roads. She 
can avail herself of the assistance the New Consortium 
can render and use the loans contracted for constructive 
purposes and thus build up her own economic structure 
and stabilize her own political equilibrium. In this way 
she can find her salvation and derive benefit from the 
New Consortium without incurring its perils. Or, she 


\ 


THE NEW BANKING CONSORTIUM 415 


can contract loans for administrative and consumptive 
purposes, wasting the proceeds of loans and pawning 
her national assets, one after the other. In this way, 
she will inevitably follow the footsteps of Egypt and 
bring. her people to the brink of ruin and bankruptcy. 
Which road will China take? May her responsible lead- 
ers select the right path! 

Finally, the advent of the New Consortium brings 
into being a great issue in the politics of the Far East, 
which will be the burning problem of the next decade 
or so. That is the control of China. On the one hand, 
if China should fail in her loan obligations, the Powers, 
through the agency of the New Consortium, are bound 
to impose international control. On the other, Chinese 
nationalism, awakened to the seriousness of the situa- 
tion, and having manifested itself so effectively and so 
nobly in the Chinese Revolution of 1911 and the Stu- 
dents’ Strike and Economic Boycott of 1919, would 
not permit their inalienable right of national independ- 
ence to be mortgaged or extinguished, but would enter 
upon a death struggle for the preservation of their na- 
tional liberty and sovereignty. Hence it is reasonable to 
believe that the next decade or so may witness the great 
struggle of the Chinese people for their national inde- 
pendence as against the control of Japan, or of the Pow- 
ers through the New Consortium. 


NOTES TO. CHAPTER 'XXV. 


1. Documents Concerning the New Consortium, released to 
press by the Dept. of State, Mar. 30, 1921; Far Eastern Review, 
March, 1921, p. 150. 

2. T. W. Lamont, Preliminary Rep. on the New Consort for 
China, p. 6. 

3. Documents Concerning the New Consortium, op. cit., Joint 
Note, Sept. 28, 1920. 

4. Copy furnished through courtesy of J. P. Morgan & Co. 

5. Documents, op. cit., Joint Note of American, British, French 
and Japanese Legations at Peking to Chinese Foreign Office, 
Jan, 13, 1921. 


© 


XXVI 
THE LEAGUE OF NATIONS AND CHINA 


ANOTHER event that has affected, or is going to affect, 
the foreign relations of China, is the League of Nations. 
In this treatise, we do not propose to deal with the or- 
ganization, operation, or efficacy of the League as it 1s, 
which falls beyond the scope of this work, but we do 
aim, rather, to treat of the effects it has upon the for- 
eign relations of China and of the rights and duties 
which she has incurred by virtue of her membership 
therein. 

Before the advent of the League, there was no guar- 
antee or protection for the territorial integrity and po- 
litical independence of any nation. To maintain its na- 
tional existence, every nation was obliged to depend 
upon its own armament or upon the help of its allies. 
In other words, the rights of territorial integrity and 
political independence were not secured by any other 
means than the armament of the nations themselves 
and the arbitrament of war. Stated in another way, the 
nations, for want of adequate remedy furnished by the 
society of nations, had no more rights of sovereignty 
than those which their own armament and other resources 
could maintain and those which the other states were 
willing or forced to accord to one another. For instance, 
after China’s disastrous defeat of 1894-5 by Japan, the 
Powers proceeded to her and seized various strategic 
bases. In the eyes of the Powers, China had 
no more rights of sovereignty than those which 
her own armament and other resources could de- 
fend and those which the Powers accorded to her. In 
short, under the old régime, the sovereign rights of ter- 

416 


THE LEAGUE OF NATIONS AND CHINA 417 


ritorial integrity and political independence were not se- 
cured by any international protection or guarantee, and 
she was therefore exposed to the ill-treatment and 
spoliation of the stronger Powers. Thus, the old régime 
was the rule of might, and not of right. 

The new order, however, as inaugurated by the League 
of Nations, furnishes what was lacking in the old régime. 
no matter how inadequate and how impotent it may 
prove to be. That is, it provides for an international 
guarantee or protection of the sovereign rights of ter- 
ritorial integrity and political independence. While for- 
merly there was practically no court of appeal for the 
vindication of national rights, now there is the League 
which requires the submission of all disputes among 
the members either to arbitration or to inquiry by the 
Council or the Assembly of the League. While under 
the old régime there was no international guarantee or 
_ protection for national rights as growing out of sov- 
ereignty, in the new order there are the sanctions pro- 
vided in the League Covenant consisting of diplomatic 
severance, economic boycott, international force upon 
the recommendation of the Council, and expulsion from 
the League by a unanimous vote of the Council and As- 
sembly. Whereas in absence of a league each nation 
had no other alternative than either to fight or to sub- 
mit, in case of an ultimatum or actual invasion, as shown 
in the case of Japan’s ultimatum of May 7, 1915, now 
under the protection of the League a member so threat- 
ened can appeal to the Council or Assembly, or submit 
to arbitration, in which cases, if the recommendation 
of the Council is unanimous, or if that of the Assembly 
is concurred in by the representatives of the Powers 
on the Council and a majority of the other mem- 
bers, excluding in each case the parties to the dispute, or 
if the award of the arbitration is properly made, the 
party so threatened can abide by the award or recom- 
mendation and thus win the protection of the League. 


418 PROBLEMS ARISING SINCE THE WAR 


Thus, however inadequate, a remedy is provided for 
the rights of nations, which was non-existent under the 
old régime. This surely is a step forward in the po- 
litical evolution of mankind. 

With this provision of an international guarantee or 
protection for national rights, China’s foreign relations 
undergo a change for better. Whereas formerly China 
could not appeal to any tribunal or constituted authority 
in case of the violation of her rights, but had either to 
submit or fight, she can now call for arbitration, or ap- 
peal to the Council or the Assembly for a recommenda- 
tion; and should she choose to abide by an award or 
recommendation made in pursuance of the provisions 
of the Covenant of the League, she would obtain its 
protection in case of an attack. While under the old 
régime her rights of territorial integrity and political 
independence were insecure except as her own arma- 
ment, or jealousy among the Powers, or their friendly 
assistance could maintain them, her territorial integrity 
and political independence are now assured by the 
League, or at least supposed to be so assured. ‘To put 
it concretely, under the protection of the League, the 
threatened partition of 1900 is not likely to come to pass 
again, nor the German seizure of Kiaochow, nor the 
Japanese ultimatum of May 7, 1915. Herein lies a great 
advance in the foreign relations of China as arising out 
of; the: existence of the Leavue,? 


Having seen the improvement in China’s foreign re- 
lations as growing out of the existence of the League 
and her membership therein, we will next consider the 
rights and duties she has acquired as a member of the 
League. At the meeting of the Assembly, she has the 
right to cast one vote and to have no more than three 
representatives (Article 3). At the meeting of the 
Council, by virtue of her recent election thereto,?“ she 
has the right to cast one vote and to send one represen- 


THE LEAGUE OF NATIONS AND CHINA 419 


tative (Article 4), although “any member of the League 
not represented on the Council shall be invited to send a 
representative to sit as a member at any meeting of the 
Council during the consideration of matters specially 
affecting the interests of that member of the League” 
(Article 4). As a friendly right of each member of the 
League, she can “bring to the attention of the Assembly 
or of the Council any circumstance whatever affecting 
international relations which threatens to disturb in- 
ternational peace or the good understanding between na- 
tions upon which peace depends” (Article XI).28 She 
has also the right to withdraw from the League, after 
two years’ notice, “provided that all its international 
obligations and all its obligations under this Covenant 
shall have been fulfilled at the time of its withdrawal” 
(Article I) ; and to refuse to be bound by any amend- 
ment, in which case she ceases to be a member of the 
League (Article 26). 

What is more important, she can appeal to the Council 
for inquiry and recommendation, in case of any dispute, 
or submit to arbitration. 


“The Members of the League agree that if there should 
arise between them any dispute likely to lead to a rup- 
ture, they will submit the matter either to arbitration 
or to inquiry by the Council, and they agree in no case 
to resort to war until three months after the award by 
the arbitrators or the report by the Council. 

In any case under this Article the award of the arbi- 
trators shall be made within a reasonable time, and the 
report of the Council shall be made within six months 
after the submission of the dispute” (Article 12). 


In “disputes as to the interpretation of a treaty, as to 
any question of international law, as to the existence of 
any fact which if established should constitute a breach 
of any international obligation, or as to the extent and 


420 PROBLEMS ARISING SINCE THE WAR 


nature of the reparation to be made for any such 
breach” (Article 13), which are declared to be generally 
appropriate for submission to arbitration, she can, with 
the consent of the other party or parties to the dispute, 
submit the matter to arbitration, and if she abides by 
the award, gains the protection of the League (Article 
13). In disputes likely to lead to a rupture, and which 
are not submitted to arbitration, she can submit the mat- 
ter to the Council by giving notice to the Secretary 
General. “If a report by the Council is unanimously 
agreed to by the members thereof other than the Repre- 
sentatives of the one or more of the parties to dispute, 
the Members of the League agree that they will not go 
to war with any party to the dispute, which complies 
with the recommendations of the report.” This means 
that in case of a unanimous report by the Council ex- 
cepting the parties to the dispute, she gains the protec- 
tion of the League by compliance with the report or 
recommendation. If, however, the Council fails to 
render a unanimous report, then she can adopt what 
measures she pleases “for the maintenance of right and 
justice,’ which is tantamount to saying that she can 
make war, if she deems it fit and desirable. On the other 
hand, she can ask the Council to refer the matter to the 
Assembly if she does so within fourteen days after the 
submission of the dispute, in which case a report of all 
“the representatives of the Members of the League rep- 
resented on the Council and of a majority of the other 
members of the League, exclusive in each case of the 
representatives of the parties to the dispute, shall have 
the same force as a report by the Council concurred in 
by all the members thereof other than the representa- 
tives of one or more of the parties to the dispute” 
(Article 15). 

Finally, and what is equally as important as the right 
of appeal, she has the right of territorial integrity and 
political independence as guaranteed by Article 10: 


THE LEAGUE OF NATIONS AND CHINA 421 


“The Members of the League undertake to respect and 
preserve as against external aggression the territorial 
integrity and existing political independence of all Mem- 
bers of the League. In case of any such aggression or 
in case of any threat or danger of such aggression the 
Council shall advise upon the means by which this obli- 
gation shall be fulfilled.” 


As Wilson remarked, this is the heart of the Cove- 
nant. “Article 10 seems to me to constitute the very 
backbone of the whole Covenant. Without it the 
League would be hardly more than an influential debat- 
ing society.” * 


On the other hand, since rights and duties are cor- 
relatives, in acquiring these rights, she also incurs cor- 
responding duties. By subscribing to the Preamble of 

the League which runs: 


“in order to promote international cooperation and to 
achieve international peace and security by the accept- 
ance of obligations not to resort to war, by the prescrip- 
tion of open, just and honorable relations between na- 
tions, by the firm establishment of the understand- 
ings of international law as the actual rule of conduct 
among governments, and by the maintenance of justice 
and a scrupulous respect for all treaty obligations in the 
dealings of organized peoples with one another, the High 
Contracting Parties agreed to this Covenant of the 
League of Nations,” 


she places herself under obligation to observe, as far as 
feasible, the four ideals or methods of promoting inter- 
national codperation and peace, namely: 


1. By the acceptance of obligations not to resort to 
war; 

2. By the prescription of open, just and honorable 
relations ; 


422 PROBLEMS ARISING SINCE THE WAR 


3. By the firm establishment of the understandings 
of international law as the actual rule of conduct 
among Governments, and 

4. By the maintenance of justice and a scrupulous 
respect for all treaty obligations in the dealings of 
organized peoples with one another. 


She also obligates herself to perform the necessary 
duties connected with the humanitarian tasks connected 
with labor legislation, colonial administration, traffic in 
women, children, opium and other dangerous drugs, free- 
dom of communication and equitable treatment in inter- 
national commerce, prevention of disease, and Red 
Cross,?4 

She further engages to bear the expenses of the Sec- 
retariat “in accordance with the apportionment of the 
expenses of the International Bureau of the Universal 
Postal Union” (Art. 6), which may include the ex- 
penses of any bureau or commission placed under the 
direction of the League (Art. 24). Without the con- 
currence of the Council, she is also not to exceed the 
limit of armament as recommended by the Council after 
she has adopted the recommendation. She is to inter- 
change full and frank information as to the scale of her 
armaments, her military, naval, and air programs 
and the condition of such of her industries as are adapt- 
able to war-like purposes (Art. 8). Should she be- 
come a mandatory for any colony she “shall render to 
the Council an annual report in reference to the terri- 
tory committed to its charge” (Art. 22), besides ob- 
serving the requirements as set forth in the mandate. 

Respecting treaties, she must register every treaty or 
international engagement with the secretariat, and cause 
it to be published by the League as soon as possible, no 
treaty or international engagement being binding until 
so registered (Art. 18). This means that she cannot 
enter into any secret treaties or alliances, but must pre- 


THE LEAGUE OF NATIONS AND CHINA 423 


scribe “open, just and honorable relations between na- 
tions.” She further pledges not to conclude any treaty 
or agreement inconsistent with the terms of the League 
Covenant, and in case she has assumed obligations in- 
consistent therewith, she will take steps to obtain the 
necessary release therefrom. Article 20 reads: 


“The Members of the League severally agree that this 
Covenant is accepted as abrogating all obligations or un- 
derstandings inter se which are inconsistent with the 
terms thereof, and solemnly undertake that they will not 
hereafter enter into any engagements inconsistent with 
the terms thereof. In case any Member of the League 
shall, before becoming a Member of the League, have 
undertaken any obligations inconsistent with the terms 
of this Covenant, it shall be the duty of such Member 
to take immediate steps to procure its release from such 
obligations.” 


Thus, by assuming this obligation, she recognizes the 
supremacy of the League Covenant, which is to govern 
all past, existing, and future treaties and international 
engagements. 

In regard to the sanctions as provided in the Cove- 
nant, China obligates herself to participate in and con- 
tribute her share in the enforcement and application of 
these sanctions. She is to resort to diplomatic severance 
and economic boycott against the covenant-breaking 
state. She is to contribute her quota of the interna- 
tional force recommended by the Council. She is to 
render mutual assistance in economic and financial 
measures, to resist any special measures aimed at any 
one of their number by the covenant-breaking state, and 
to allow passage of troops to the cooperating forces. 
Article 16 dealing with the sanctions of the League reads: 


“Should any Member of the League resort to war in 
disregard of its covenants under Articles XII, XIII or 


424. PROBLEMS ARISING SINCE THE WAR 


XV, it shall ipso facto be deemed to have committed an 
act of war against all other members of the League, 
which hereby undertake immediately to subject it to the 
severance of all trade or financial relations, the prohibi- 
tion of all intercourse between their nationals and the 
nationals of the covenant-breaking State, and the pre- 
vention of all financial, commercial, or personal inter- 
course between the nationals of the covenant-breaking 
States and the nationals of any other State, whether a 
Member of the League or not. 

“Tt shall be the duty of the Council: in such case to 
recommend to the several Governments concerned what 
effective military or naval force the Members of the 
League shall severally contribute to the armed forces to 
be used to protect the covenants of the League. 

“The members of the League agreed, further, that 
they will mutually support one another in the financial 
and economic measures which are taken under this Ar- 
ticle, in order to minimize the loss and inconvenience 
resulting from the above measures, and that they will 
mutually support one another in resisting any special 
measures aimed at one of their number by the covenant- 
breaking State, and that they will take the necessary 
steps to afford passage through their territory to the 
forces of any of the Members of the League which are 
cooperating to protect the covenants of the League. 

“Any Member of the League which has violated any 
covenant of the League may be declared to be no longer 
a Member of the League by a vote of the Council con- 
curred in by the representatives of all other Members.” 


While China enjoys these rights and duties acquired 
through her membership in the League, her territorial 
integrity and political independence are, by no means, 
under an absolute, or even effective, guarantee of the 
League. In accordance with Wilson’s interpretation, 
Article 10 entails no other than moral obligations on the 
part of the member states. Whatever the recommenda- 
tion of the Council may be, the state concerned can still 
decide its own course of action. ‘The council of the 


THE LEAGUE OF NATIONS AND CHINA 425 


League can only ‘advise upon’ the means by which the 
obligations of that great article are to be given effect to. 
Unless the United States is a party to the policy or action 
in question, her own affirmative vote in the Council is 
necessary before any advice can be given, ... The 
United States will, indeed, undertake under Article 10 
to respect and preserve against external aggression the 
territorial integrity and existing political independence 
of all members of the League, and that engagement con- 
stitutes a very grave and solemn moral obligation. But 
it is a moral, not a legal, obligation, and leaves our con- 
gress absolutely free to put its own interpretation upon 
it in all cases that call for action. It is binding in con- 
science only, not in law.” 4 

Hence, whatever protection or guarantee of territorial 
integrity and political independence China may obtain 
from the League must necessarily proceed out of the 
willing cooperation and good will of its Members. 
Meanwhile, she must be prepared to resist sudden inva- 
sions, as shown in the recent Russian invasion of Urga, 
the League having no instrument ready for action in 
such an emergency. She must also be prepared for war, 
in case the recommendation of the Council is not unan- 
imous, or in case the report of the assembly is not 
concurred in by the representatives of all the members 
of the League represented on the Council and a majority 
of the other members exclusive in each case of the rep- 
resentatives of the party or parties to the dispute, for, in 
such cases, the League does not forbid war, but simply 
delays war for the duration of the time covering the 
consideration by the Council or Assembly within six 
months and three months after the delivery of the re- 
port or recommendation. It will, therefore, be a great 
mistake on the part of China to discard her armament 
or even to neglect it, trusting in the efficacy of the 
League. It should rather be her duty to be fully pre- 
pared for war, just as if there were no League in exist- 


426 PROBLEMS ARISING SINCE THE WAR 


ence, bending, however, her efforts henceforth to inter- 
national peace and devoting her military and naval forces 
to the maintenance of the principles of the League. 


NOTES TO CHAPTER XXVI 


1. For the Covenant of the League of Nations, see Hearings 
before the Committee on Foreign Relations, the United States 
Senate, Sixty-sixth Congress, First Session, Senate Document 
No. 106, on Treaty of Peace with Germany, pp. 270-276; Treaty 
of Peace with Germany, published by the American Association 
for International Conciliation, Sept., 1919, No. 142, pp. 939-959; 
also American Journal of Int. Law, Jan., 1921, Official Docu- 
ments, p. 4 et seq.; also Supp. of the Amer. Journal of Int. Law, 
Juy, 1919, p. 157 et seq. 

Pie Hearings, Conference at White House, Aug. 19, 1919, 
p. 552, Wilson’s testimony before the Committee regarding the 
possible effect of the League on China. 

ZA, China was elected to the Council of the League on Dec. 
15, 1920. The election is for one year only, subject to reélection. 
—See New York Times, Dec. 16, 1920. 

2B. Also see Article XIX. 

3. Hearings, ibid., p. 504. 

3A. See Articles 23 and 25. 

4. Hearings, ibid., p. 504. 


XXVII 
THE SHANTUNG QUESTION 


Tue Shantung Question has become a world prob- 
lem. Like the Alsace-Lorraine controversy, which has 
been settled by the World War, it carries the potential 
germ of another world conflict. As the facts of this 
question are well known, we shall not attempt to reiterate 
them, but confine ourselves to an analysis of the problem 
with a view to reaching a solution, just and equitable to 
China and Japan. 

To refresh the memory, we will recall that shortly 
after the outbreak of the World War, China declared 
her neutrality by a Presidential Mandate, dated August 
6, 1914. On August 15, 1914, Japan presented an ulti- 
matum to Germany advising unconditional surrender of 
the leased territory on or before September 15, “with a 
view to eventual restoration of the same to China,’ and 
also advising the immediate withdrawal or disarmament 
of all belligerent vessels within the Chinese and Japa- 
nese waters, asking for a reply by noon of August 23.1 
Failing to receive a reply at the appointed time, she de- 
clared war on Germany and proceeded to attack the Ger- 
man leasehold of Kiaochow. Meanwhile China did not 
protest against either the ultimatum or the attack, but 
on the contrary intimated her intention to participate 
in the campaign, which, however, was not received with 
favor. 

During the campaign (on September 3, 1914) Japan 
landed her troops at Lungkow, Shantung, outside the 
leased territory. On the same day, China proclaimed a 
war zone delimiting the belligerent area to approximately 
one hundred miles west of Tsingtao, including Kiaochow 

427 


428 PROBLEMS ARISING SINCE THE WAR 


and Laichow, but excluding Weihsien and Tsinan. On 
September 26, 1914, the Japanese troops, marching from 
Lungkow to Weihsien, captured the railway station there 
belonging to the Tsingtao-Tsinan Railway, and on Oc- 
tober 6, 1914, seized the railway station at Tsinan, the 
capital of Shantung. Soon they took possession of the 
entire line of the Tsingtao-Tsinan Railway, displacing 
its employees and substituting Japanese subjects. In 
addition they also seized the German mines adjoining the 
railway. Meanwhile the siege of Tsingtao proceeded and 
on November 7, 1914, the stronghold was captured. 

Thereafter, on January 18, 1915, Japan presented the 
now celebrated Twenty-one Demands, among which was 
the provision (Group I, Article 1): 


“The Chinese Government engages to give full assent 
to all matters upon which the Japanese Government may 
hereafter agree with the German Government relating 
to the disposition of all rights, interests and concessions, 
which Germany, by virtue of treaties or otherwise, pos- 
sesses in relation to the province of Shantung.” ? 


On May 7, 1915, Japan presented an ultimatum, be- 
cause of which China yielded. In consequence, the 
treaties of May 25, 1915, were signed, one relating to 
Shantung with three exchanges of notes, the other to 
South Manchuria and Eastern Inner Mongolia with nine 
sets of exchange of notes. 

In return Japan pledged to restore the leased territory 
of Kiaochow, in an exchange of notes, May 25, 1915: 


omy 7, 
iy 


~“When, after the termination of the present war, the 
leased territory of Kiaochow Bay is completely left to 
the free disposal of Japan, the Japanese Government will 
restore the said leased territory to China under the fol- 
lowing conditions: 

“1. The whole of Kiaochow Bay to be opened as a 
commercial port. 

“2. A concession under the exclusive jurisdiction of 


THE SHANTUNG QUESTION 429 


Japan to be established at a place designated by the Japa- 
nese Government. 

“3. If the foreign Powers desire it, an international 
concession may be established. 

“4. As regards the disposal to be made of the build- 
ings and properties of Germany and the conditions and 
procedure relating thereto, the Japanese Government and 
the Chinese Government shall arrange the matter by 
mutual agreement before the restoration.” ® 


Then, on March 14, 1917, China severed diplomatic 
relations with Germany, and on August 14, 1915, de- 
clared war on Germany and Austria-Hungary, abrogating 
all treaties, agreements, and conventions she had had with 
the Central Powers, to the effect that 


“all the treaties of whatever nature between China and 
Germany as well as Austria-Hungary are abrogated, as 
also all such provisions of the Protocol of September 7, 
1901, and other similar international agreements in so 
far as they concern China and Germany as well as 
Austria-Hungary.” # 


This was duly taken notice of by the legations addressed, 
including that of Japan. 

On September 24, 1918, in an exchange of notes be- 
tween the Chinese Minister at Tokio and the Japanese 
Minister for Foreign Affairs, respecting adjustment of 
questions concerning Shantung, it was agreed that 
(Art. 6) “the Kiaochow-Chinan Railway, after its own- 
ership is definitely determined, is to be made a Chino- 
Japanese joint enterprise.” ° 

At the Paris Peace Conference of 1919, both China 
and Japan contended for the former German rights in 
Shantung. On April 30, 1919, the Council of Three 
rendered the decision in favor of Japan, which was in- 
corporated in Articles 156, 157, 158, of the Treaty of 
Peace with Germany, signed at Versailles on June 28, 


1919. 


430 PROBLEMS ARISING SINCE THE WAR 


The question, as stated above, turns on these issues: 
1. Whether Japan has the right 
(1) To attack the leased territory of Kiaochow ; 
(2) To land her troops at Lungkow and then 
march through Chinese territory; and 
(3) To seize the Kiaochow-Chinan Railway and 
the adjoining mines. 

2. Whether China’s Declaration of War abrogates all 
treaties, conventions and agreements with Germany 
and China thus recovers the German concessions in 
Shantung. 

3. Whether Japan’s possession of German rights in 
Shantung is validated by 

(1) The Treaty of May 25, 1915, and 
(2) The Agreement of September 24, 1918. 


As to whether Japan had the right to attack the leased 
territory of Kiaochow, there seems to be an honest dif- 
ference of opinion. On the one hand, China claims that, 
inasmuch as she reserved her sovereignty over the leased 
territory in Article 1 of the Lease Convention,® she can 
assert the neutrality of the leased territory in time of 
a war in which the lessee state is involved. In other 
words, arising from the reservation of sovereignty, she 
deems the leased territory as neutral, and not subject to 
the hostile operation of belligerents. Further, even in 
case an attack should have become necessary to abate a 
nuisance or to remove a menace, she contends that her 
previous consent should have been obtained before the ~ 
attack could be legitimate. 

On the other hand, Japan claims that, basing her ac- 
tion on the precedent of Port Arthur and Talienwan, 
which leased territories she took from Russia in the war 
of 1904-5, the leased territories are not neutral, but sub- 
ject to the hostile operations of belligerents. The grant 
of the right of fortification, she contends, and the sur- 
render of the right of administration, during the term 


THE SHANTUNG QUESTION 431 


of the lease, all indicate that these territories are proper 
objects of attack. She further maintains that, granted 
she had no right to attack the territory, she had notified 
the Chinese Government before the attack, and that the 
Chinese Government -did not make any strenuous objec- 
tion, nor lodge any protest, but, on the contrary, requested 
participation in the attack, which, though rejected, could 
be taken as tantamount to tacit consent.7 

As to whether Japan had the right to land at Lungkow 
and march through the Chinese territory, it is quite safe 
to say that Japan had no such right, but, on the con- 
trary, exceeded the limit of her rights and violated the 
neutrality of China. China having declared her neu- 
trality by the Presidential Mandate of August 6, 1914,° 
Japan was under obligation to respect her neutrality. 
She had no more right to move her troops and supplies 
through the neutral territory of China than Germany had, 
in 1914, to cross the neutral territory of Belgium in order 
to attack France. “It is a principle of the law of nations 
that no belligerent can rightfully make use of the terri- 
tory of a neutral state for belligerent purposes, without 
the consent of the neutral Government.” °- 

It has been contended by Japan that military necessity 
justified the violation, inasmuch as. she could attack 
Kiaochow more easily from the rear than from the front 
or side. This argument, however, does not seem to stand 
the test of analysis. In the first place, there was no 
military necessity calling for such a violation of China’s 
neutrality. Japan could have attacked Tsingtao just as 
well by landing within the leased territory of Kiaochow 
as by way of Lungkow, if not better. This was. borne 
out by the action of the British, who, in due respect of 
China’s neutrality, landed at Laoshan on September 23, 
and because of the distance from Laoshan to Tsingtao 
being less than from Lungkow to Tsingtao and fewer 
natural obstacles in the way, they reached the scene of 
action in time to participate in the first encounter with 


432 PROBLEMS ARISING SINCE THE WAR 


the Germans.?® This action on the part of the British 
clearly proved that there was no such military necessity, 
and this alone, in glaring contrast with Japan’s action, 
is sufficient to establish the guilt of Japan. | 

Granting for argument’s sake that there was the mili- 
tary necessity, this still did not justify Japan’s violation 
of China’s neutrality. Germany pleaded the guilt of her 
own violation of Belgian neutrality on the ground of 
military necessity. But the world did not condone Ger- 
many’s crime on that account. If the violation of Bel- 
gian neutrality is unjustifiable, as the verdict of man- 
kind and the late World War have held it to be so, Japan’s 
violation of China’s neutrality by landing in Lungkow is 
equally unjustifiable, even more so, because of the ab- 
sence of any ground of military necessity. 

Perhaps it may be argued that China’s proclamation 
of the war zone, on the day of Japan’s landing at Lung- 
kow, seemed to give her implied consent and hence justi- 
fied Japan’s action. It must be understood, however, 
that in proclaiming the war zone, China did not thereby 
condone Japan’s action, but rather aimed simply to pro- 
tect herself from any consequences resulting from the 
actions of belligerents within her territory, so that she 
could be free from any charges of negligence as a 
neutral. In fact, in the difficult and embarrassing situa- 
tion, the proclamation of a war zone was _ probably 
the only course of action for her to pursue. For China 
to resist Japan at Lungkow, in the face of force 
majeure, would have meant war, which would be 
contrary to the spirit of the law of neutrality. On 
the other hand, for China to remain silent would 
have been equally inexpedient, since Germany could 
then have claimed damage for injuries due to negli- 
gence on the part of China to preserve her neutrality. 
Confronted with such a dilemma, China was therefore 
constrained to proclaim the war zone, not to extenuate 
Japan but rather to protect her own position of neu- 


THE SHANTUNG QUESTION 433 


trality. It is therefore plain that, notwithstanding the 
proclamation of the war zone, Japan’s landing at Lung- 
kow remains a gross violation of China’s neutrality. 

Respecting Japan’s right to seize the Kiaochow-Chinan 
Railway and the adjoining mines, it is again evident that 
Japan had no such right. On the contrary, she did so 
in violation of China’s neutrality. The railway and 
mines in question were situated within Chinese terri- 
tory, outside the leased territory of Kiaochow, and hence 
were under the protection of the Chinese authorities. No 
matter whether they were the public or private property 
of Germans, the fact that they lay within the Chinese 
territory was sufficient to clothe them with the protec- 
tion of China’s neutrality, and to exempt them from 
seizure by any belligerent whatsoever. 

In fact, Japan perpetrated the seizure in spite of the 
repeated protests of the Chinese Government and thus 
knowingly violated China’s neutrality. As the war zone 
delimited belligerent activities to the east of Wethsien 
or within one hundred miles west of Tsingtao, and as, 
on September 26, the Japanese troops proceeded to Weih- 
sien and occupied the railway station, the Chinese Gov- 
ernment protested on the next day, that is, September 27, 
1914, as follows: 


“On the 7th of September a dispatch received from 
your Government stated that your Government under- 
stood, with some difficulty, what our Government meant 
in that declaration. This Ministry (the Chinese Foreign 
Office) further declared that the railroad from Weihsien 
to Chinan should be under Chinese protection, and 
through Your Excellency we requested your Government 
to issue an order prohibiting your troops from advancing 
to Weihsien, or any place west of Weihsien. But now 
the troops of your Government have forced their way 
into Weihsien and taken possession of the railway. Con- 
sidering that the railway belongs to a Sino-German 
corporation, that all the railway stations have also been 
under Chinese protection, and in none of them has there 


434 PROBLEMS ARISING SINCE THE WAR 


ever been any German troop, and that Weihsien is in 
the purely neutral territory, the acts committed by the 
troops of your country are manifestly contrary to the 
declaration and in violation of China’s neutrality.” * 


Following this protest, on the next day, September 28, 
1914, the Japanese Minister at Peking called at the 
Chinese Ministry of Foreign Affairs, and, to the surprise 
and indignation of the Chinese Government, informed the 
latter that, because of military necessity, the Japanese 
troops would move westward from Weihsien and occupy 
the whole line. In consequence of this, on September 
30, 1914, the Chinese Government again protested: 


“Tt is a settled principle that even the public property 
of a belligerent while on a neutral territory, cannot be 
attacked, or taken possession of by the other billigerent, 
much more so in the present case when the property in 
question is jointly owned by Chinese and German capi- 
talists. ... It has been a long while since the troops 
of your country have begun to attack Tsingtao, and the 
German troops in Tsingtao have been isolated, rendered 
helpless, and entirely and long ago cut off from the com- 
munication through the Kiaochow Railway. Not only 
our Government will never allow the Germans to make 
use of the line, it is actually beyond their power to make 
use of it. Therefore the contemplated action of your 
country is decidedly not a case of military necessity.” ” 


In response to these repeated protests, the Japanese 
Government replied on October 2, 1914, that the Ger- 
man Kiaochow-Chinan Railway was of the same nature 
and character as the leased territory and that the pur- 
pose of Japan’s attack was not only to eliminate the 
German base of Kiaochow, but to gain the control and 
administration of the railway in question. Reiterating 
the argument of military necessity, it contended that, 
lying at the rear of the leased territory, the control of 
the railway was essential to the safety of Japan in 
Kiaochow: 


THE SHANTUNG QUESTION 435 


“Regarding the Shantung Railway, ... it is of the 
Same character as the leased territory. This fact is be- 
yond dispute, in view of its origin, the special charter 
given by the German Government and the way in which 
the company draws its funds. .. . 

“Moreover, a railway from its very nature positively 
cannot be treated one part separately from the other. 
Although one part of this German-owned railway is 
situated west of Weihsien, it cannot be held as having 
changed its character on the ground that a part remains 
in neutral territory. Besides, the aim of the Imperial 
Government is not only to overthrow the base possessed 
by the enemy, but also to cause the control and admin- 
istration of this indivisible railway to fall into our posses- 
sion. 


“Although the Chinese Government holds that under 
the present condition the Shantung Railway cannot be 
utilized by the German troops in view of its severance 
with Chinan, yet from the attacking troops’ point of view, 
the railway being immediately behind Tsingtao, and in 
view of the present situation, it is a serious danger to 
the military operation to leave a railway by the enemy 
perrectly free,” 2% 


It can be seen, from these extracts from the official 
correspondence, that what China strove for was the 
preservation of her neutrality, and that what Japan aimed 
at was not only the leased territory of Kiaochow, but 
also the Kiaochow-Chinan Railway with the adjoining 
mines, although they lay within Chinese neutral terri- 
tory. Such facts cannot but compel a reasonable and 
impartial mind to declare that Japan, in gaining the 
control of the Kiaochow-Chinan Railway and the adjoin- 
ing mines, violated the neutrality of China. 

This conclusion is all the more convincing and ines- 
capable when the rules governing the inviolability of 
neutral territory, as summarized by John Bassett Moore, 
are taken into consideration: ** 


436 PROBLEMS ARISING SINCE THE WAR 


“".. It appears (1) that the commission of hostility 
against another on neutral territory is a violation of the 
law of nations; (2) that such violation involves .an of- 
fense to the neutral nation, and that reparation from the 
offending belligerent is due to that nation alone; (3) 
that, if property was captured, it is the duty of the 
offending belligerent to restore it on the demand of the 
neutral; (4) that nations have, by numerous treaties, 
pledged themselves as neutrals and to use ‘all the means 
in their power’ to protect or effect the restitution of prop- 
erty in such cases; but (5) that the manner in which 
this obligation must be discharged was not ascertained 
by any express rule or by any general understanding.” 


Applying these rules to Japan’s seizure of the German 
Kiaochow-Chinan Railway and the adjoining mines lying 
within the Chinese neutral territory outside the leased 
area, it is clear that she violated China’s neutrality and 
that, in consequence, she is under obligation, upon the 
demand of China, to restore the same. 


We now come to consider whether China’s declaration 
of war abrogates all the treaties of whatever nature, thus 
legalizing China’s recovery of Germany’s former conces- 
sions in Shantung. The writers on international law are 
not agreed as to whether war abrogates all treaties. Vat- 
tel maintains that war abrogates all treaties which pre- 
suppose the continuance of peace, except those made in 
anticipation of rupture. Like Vattel, Kent contends 
that, “as a general rule, the obligations of treaties are 
dissipated by hostility, and are extinguished and gone 
forever, unless revived by a subsequent treaty. But 
if a treaty contain any stipulations which contemplate 
a state of future war, and make provisions for such an 
exigency, they preserve their force and obligation when 
the rupture takes place.” *® On the other hand, Fiore 
says: “The extinction of all treaties and conventions 
concluded between the belligerent states cannot be deemed 


THE SHANTUNG QUESTION 437 


an immediate effect of war, but only the termination of 
those which, by their nature and object, are necessarily 
inconsistent with a state of war.” 1” 

Another reasonable doctrine is that of Calvo, which 
states: ** “The solution of these questions depends natu- 
rally upon the particular character of the engagements 
contracted. Thus all are agreed in admitting the rup- 
ture of conventional ties concluded expressly with a view 
to a state of peace, whose special object it is to promote 
relations of harmony between nation and nation, such as 
treaties of amity, of alliance, and other acts of the same 
nature having a political character. As to customs and 
postal arrangements, conventions of navigation and com- 
merce, and agreements relative to private interests, they 
are generally considered as suspended till the cessation of 
hostilities. By necessary consequence, it is a principle 
that every stipulation written with reference to war, as 
well as all clauses described as perpetual (qualifiées de 
perpetuélles) preserve in spite of the outbreak of hos- 
tilities their obligatory force so long as the belligerents 
have not, by common accord, annulled them or replaced 
them with others.” 

John Bassett Moore presented his own conclusion on 
the subject as follows: “It is evident that . . . there was 
a recognition of the principle, which is now received as 
fundamental, that the question whether the stipulations 
of a treaty are annulled by war depends upon their in- 
trinsic character. If they relate to a right which the 
outbreak of war does not annul, the treaty itself re- 
mains unannuled.” 1° 

Taking as our criterion the conclusion arrived at by 
Moore that the question as to whether the stipula- 
tions of a treaty are annulled by war, depends upon their 
intrinsic character, it is evident that the treaties in ques- 
tion are of an intrinsic character which the war should 
nullify. The German lease convention of March 6, 1898, 
was extorted from China by the threat of the mailed fist. 


438. PROBLEMS ARISING SINCE THE WAR 


It further alienated from China her jurisdiction over the 
leased territory for ninety-nine years. In the event of 
war, the continuance of an alien jurisdiction on the soil 
of China would be inimical to her safety, and it is but 
natural, therefore, that she should avail herself of the 
opportunity of war to remove that source of danger and 
recover the delegated, or rather wrested, rights of sov- 
ereignty. Further, the lease convention granted to Ger- 
many the right of fortification, which meant that Ger- 
many, in time of war, could use the leased territory as 
a basis of action against China. It is plain, therefore, 
that such a treaty should not be allowed to persist in 
time of war, but should be abrogated upon the declara- 
tion of the same. As to the Tsingtao-Chinan Railway 
and the adjoining mines, while the agreements thereon 
were not intrinsically of a character incompatible with 
the status of war, their public character and strategic 
and political relations to the safety of China, warranted 
their being taken into custody by the terriorial sovereign 
during the period of war, and pending the final settle- 
ment by peace negotiation. 

It can, therefore, be fairly concluded that, inasmuch 
as the declaration of war on the part of China had abro- 
gated the lease convention of March 6, 1898, all the Ger- 
man rights in Shantung arising thereform should have 
reverted to China automatically, and that Japan’s pos- 
session of them from that moment was in defiance and 
contravention of China’s rights. It can also be affirmed 
that the Kiaochow-Tsingtao Railway and the adjoining 
mines should have come into the custody and possession 
-of China upon her declaration of war, and that Japan’s 
control and possession of the same was not only con- 
summated in violation of China’s neutrality, but also 
retained in defiance and contravention of China’s rights. 


We now come to the third issue—that of whether 
Japan’s possession of the German rights in Shantung 


THE SHANTUNG QUESTION 439 


is validated by the Treaty of May 25, 1915, and the 
Agreement of September 24, 1918. As regards the con- 
sent which Japan exacted from China by virtue of Ar- 
ticle 1 of the Treaty of May 25, 1915, respecting Shan- 
tung,”° it must be observed that the assent, as provided 
therein, conceding for argument’s sake its validity, which 
is contested, is not applicable to the final settlement at 
the Paris Peace Conference. For the negotiation was 
not between Germany and Japan as stipulated in the 
provision, but between the Allied and associated Powers 
on the one hand and Germany on the other. Hence, 
inasmuch as Japan was “debarred from negotiating sepa- 
rately with Germany in respect to the latter’s system in 
Shantung owing to the decision of the Conference to 
deal with German territories and concessions without 
consulting Germany,” it is evident that Japan did not 
comply with the provision of coming to an agreement 
‘with Germany regarding the free disposal of Kiaochow 
and that “the article in question should be deemed in- 
operative.” 24 

Granting, however, for argument’s sake, that the set- 
tlement as reached at the Paris Peace Conference came 
within the scope of the provision, it is to be claimed 
that the consent was not given of China’s free will, but 
rather was exacted under the duress of the ultimatum 
of May 7, 1915, and the demonstration of naval and 
military forces accompanying it. While international 
law recognizes the validity of treaties imposed, even under 
coercion, by victorious states upon the vanquished, it is, 
nevertheless, not within reason to believe that interna- 
tional law recognizes the validity of treaties imposed by 
one friendly nation upon another, while in the relation 
of peace and amity. It is true that “coercion, while in- 
validating a contract produced by it, does not invalidate 
a treaty so produced. Thus there can be no question 
of the binding force of the treaty which followed the 
French-German War which led to the dethronement of 


449 PROBLEMS ARISING SINCE THE WAR 


Napoleon III, though its terms were assented to under 
coercion. The same may be said of the consent of France 
in the settlement enforced by the allies after Waterloo, 
and so of the treaty by which Mexico ceded California 
and the adjacent territory to the United States.” ** It 
is, nevertheless, to be noted that what is recognized by 
international law is the validity of treaties made in con- 
sequence of war though imposed necessarily by the victor 
on the vanquished under duress, and that it is not con- 
ceivable that international law, postulating as it does 
the fundamental principles of territorial sovereignty and 
the equality and independence of states, will countenance 
and give validity to an agreement or treaty, the consent 
to which was exacted from a friendly nation in time of 
peace, and this in consequence of the violation of the 
latter’s neutrality. Fiore says, while admitting the valid- 
ity of treaties imposed by victorious states upon the 
defeated in consequence of war: “Treaties concluded 
between states must be freely assented to. Assent is not 
valid if given by mistake, extorted by violence or ob- 
tained by fraud.” 78 

The official statement given out by the Chinese Gov- 
ernment regarding the Chino-Japanese negotiations of 
1915, clearly proves that China’s consent relating to the 
disposal of the German rights in Shantung was not freely 
and fully given, but was exacted under the duress of 
the ultimatum of May 7, 1915. The statement records 
that on February 2, 1915, at the first conference, while 
she consented in principle to Article 1 relating to the 
disposal of the German rights in Shantung, China never- 
theless made certain counter-proposals as conditions to 
the grant of her consent, namely, Japan’s pledge to re- 
store Kiaochow, China’s right to be represented at the 
negotiations between Japan and Germany when dealing 
with the disposal of Kiaochow, the indemnification of 
China’s losses due to Japan’s operations within the 
Chinese territory, the restoration of the control of the 


THE SHANTUNG QUESTION 441 


Maritime Customs, the telegraph and the postoffices in the 
possession of Japan, the removal of the Japanese mili- 
tary railway and telegraph lines and the withdrawal 
of Japanese troops.”4 

Again, China’s reply of May 1, 1915, to Japan’s re- 
vised demands of April 26, 1915, while giving her con- 
sent to any settlement that Japan might reach with Ger- 
many at the conclusion of the war, the Chinese Govern- 
ment specifically inserted two provisions calculated to 
preserve the sovereignty of China in Shantung and the 
leased territory and to act as conditions to the grant of 
the consent in question: 


“The Japanese Government declare that when the 
Chinese Government give their assent to the disposition 
of interests above referred to, Japan will restore the 
leased territory of Kiaochow to China; and further rec- 
ognize the right of the Chinese Government to partici- 
pate in the negotiations referred to above between Japan 
and Germany. 

“The Japanese Government consent to be i oH SH 
for the indemnification of all losses occasioned by Japan’s 
military operation around the leased territory of Kiao- 
chow. The customs, telegraphs and postoffices within 
the leased territory of Kiaochow shall, prior to the resto- 
ration of the said leased territory to China, be adminis- 
tered as heretofore for the time being. The railways and 
telegraph lines erected by Japan for military purposes 
are to be removed forthwith. The Japanese troops now 
stationed outside the original leased territory of Kiao- 
chow are now to be withdrawn first, those within the 
original leased territory are to be withdrawn on the res- 
toration of the said leased territory to China.” *44 


Japan’s ultimatum of May 7, 1915, contains a refer- 
ence to these conditions as set forth by China which 
proves beyond doubt that, except for the duress or coer- 
cion of the ultimatum, China would not have consented 
to Japan’s settlement with Germany regarding the dis- 


442 PROBLEMS ARISING SINCE THE WAR 


posal of the German rights in Shantung at the conclusion 
of the war, and that it was the duress exerted by the 
ultimatum that caused the Chinese Government to relin- 
quish the proposed conditions and to accept Japan’s for- 
mula for the consent without any qualification. The ulti- 
matum ran, in part, as follows: ?® 


“Furthermore, the Chinese Government not only ig- 
nored the friendly feelings of the Imperial Government 
in offering the restoration of Kiaochow Bay, but also 
in replying to the revised proposals they even demanded 
its unconditional restoration; and again China demanded 
that Japan should bear the responsibility of paying in- 
demnity for all the unavoidable losses and damages re- 
sulting from Japan’s military operations at Kiaochow; 
and still further in connection with the territory at Kiao- 
chow China advanced other demands and declared that 
she has the right of participation at the future Peace 
Conference to be held between Japan and Germany. Al- 
though China is fully aware that the unconditional resto- 
ration of Kiaochow and Japan’s responsibility of indem- 
nification for the unavoidable losses and damages can 
never be tolerated by Japan, yet she purposely advanced 
these demands and declared that their reply was final and 
decisive.” 


It can therefore be safely affirmed that, except for the 
duress of the ultimatum with the accompanying demon- 
stration of force,?® China would not have given up these 
conditions and that it was coercion—coercion applied to 
a friendly nation while in the relations of peace and 
amity—that extorted the consent. It is also obviously 
in accordance with the spirit of international law to main- 
tain that such a consent obtained under duress or coer- 
cion should invalidate Japan’s possession of the former 
German rights in Shantung. 


Adverting to whether the agreement of September 24, 
1918, validates Japan’s control over the Kiaochow-Chinan 
Railway, Article 6 of which provides: 


THE SHANTUNG QUESTION 443 


“The Kiaochow-Chinan Railway, after its ownership is 
definitely determined, is to be made a Chino-Japanese 
joint enterprise,” 


and Article 4 of which stipulates: 


“Japanese are to be employed at the headquarters of the 
above mentioned police force at the principal railway 
stations and at the police training school,” ?7 


the opinion must be expressed that in view of the illegal 
consideration for which the agreement was made, the 
agreement in question cannot forestall China’s claims 
to her own rights and validate Japan’s possession of the 
German rights in Shantung. While it is true that “a 
consideration is essential to give effect to a contract, but 
it is possible to conceive of a treaty which has no con- 
sideration,” 78 it is, nevertheless, reasonable to believe 
that international law, upholding as it does the funda- 
mental principle of territorial sovereignty, will not be 
prone to countenance the validity of a treaty, which was 
exacted on the basis of an illegal consideration arising 
out of the violation of the fundamental principle of ter- 
ritorial sovereignty. For the Agreement of September 
24, 1918, was concluded on the part of China to induce 
the withdrawal of Japan’s civil administration estab- 
lished in Shantung in violation of China’s sovereignty. 
It is an accepted principle that civil administration pro- 
ceeds out of, and usually follows, military occupation, but, 
in this particular case, the military occupation was accom- 
plished in violation of China’s neutrality and sovereignty 
as shown above; and hence the civil administration pro- 
ceeding out of, and following, an illegal military occupa- 
tion cannot but be illegitimate. 

The official Chinese claims at the Paris Peace Con- 
ference recorded: 


“Under an Imperial ordinance No. 175 of October 1, 
1917, the Japanese Government established a Civil Ad- 


444 PROBLEMS ARISING SINCE THE WAR 


ministration at Tsingtao with branches at Fantze, Chan- 
tien, and Chinan, and of which three cities are situated 
along the railway outside of the leased territory, and of 
the fifty kilometer zone. . . . The Fantze branch of the 
Japanese Civil Administration has even asserted juris- 
diction in law suits between Chinese and has levied taxes 
on ithem. 9.0 700" Ge 


It was because of this illegal establishment of civil 
administration in consequence of a military occupation 
done in violation of China’s neutrality and sovereignty, 
and the consequent indignation of the Chinese, especially 
the Shantung people, that the Chinese Government was 
constrained to agree with Japan for the Chino-Japanese 
joint administration of the Kiaochow Railway and the 
Japanese supervision of the railway police thereof in 
exchange for the withdrawal of Japan’s civil adminis- 
tration.2°*1_ Hence, inasmuch as the consideration for 
which the agreement was made was illegal and in fact 
in direct violation of China’s territorial sovereignty, the 
agreement of September 24, 1918, cannot validate Japan’s 
control over the Kiaochow-Chinan Railway. Or else 
Japan’s violation of China’s neutrality and sovereignty, 
instead of being discouraged by proper penalties, would 
be encouraged and condoned by substantial rewards, 
which is contrary to the spirit of international law.** 

It may be argued that, in connection with the agree- 
ment, on the same date, an advance of twenty million 
yen was made for the construction of the Chinan-Shunteh 
and Kaomi-Hsuchow railways and that another advance 
of a similar amount was made for the construction of 
four railways in Manchuria and Mongolia; hence China 
was estopped from making any objection to the agree- 
ment of September 24, 1918, respecting the Kiaochow- 
Chinan Railway. It is true that on the same date two 
other separate and independent agreements were signed 
for the construction of the above-mentioned railways, 


THE SHANTUNG QUESTION 445 


and it is also true that the Chinese Government received 
a total advance of forty million yen. As far as the two 
agreements are concerned regarding the construction of 
the railways in question, they may stand valid. It is, 
nevertheless, to be noted that the agreement of Sep- 
tember 24, 1918, respecting the control of the Kiaochow 
Railway, was entirely separate and independent from 
the other two, and was made, not in consideration of 
the two advances of twenty million yen each, nor for 
the consideration of Janpan’s construction of the two 
railways in Shantung and the four railways in Man- 
churia and Mongolia, but rather in consideration of the 
withdrawal of Japan’s civil administration and Japa- 
nese troops along the Kiaochow-Chinan Railway, except 
a contingent at Chinan, which, as we have seen, was 
illegal. The only fact in common between this illegal 
agreement and the other valid agreements for which the 
two advances had been received was that they were con- 
cluded and signed on the same day—September 24, 1918. 
Beyond this, there was no relation between these agree- 
ments.** Hence, inasmuch as the two advances of twenty 
million yen each were made in connection with the other 
agreements, that of September 24, 1918, respecting the 
control of the Kiaochow-Chinan Railway, still remains 
invalid and therefore does not confer upon Japan any 
title or right of possession and control with respect to 
the Kiaochow-Chinan Railway. 


Summarizing the conclusions we have so far reached 
relating to the issues of the Shantung question, it can be 
held that, while admitting the ground for an honest 
difference of opinion relative to her right to attack Kiao- 
chow, Japan had no right to land her troops at Lungkow, 
march through Chinese neutral territory and seize the 
German Kiaochow-Chinan Railway and the adjoining 
mines, in violation of China’s neutrality and sovereignty ; 


446 PROBLEMS ARISING SINCE THE WAR 


that China’s declaration of war did abrogate the lease 
convention of March 6, 1898, and thus automatically 
regained the former German concessions arising out of 
the convention and entitled her to the custody and the 
possession of the Kiaochow-Chinan Railway and the 
adjoining mines, pending the final settlement at the 
Peace negotiation; and that Japan’s possession of Ger- 
man rights in Shantung was not validated by the consent 
relative to Japan’s settlement with Germany as to the 
disposal of the German rights in Shantung as embodied 
in Article 1 of the Treaty of May 25, 1915, respecting 
the Province of Shantung, which consent, as we have 
seen, was extorted under the duress of an ultimatum; 
nor was it justified by the agreement of September 24, 
1918, respecting adjustment of questions concerning 
Shantung, which, as we recall, was contracted for an 
illegal consideration, that is, the withdrawal of Japa- 
nese troops from the Kiaochow-Chinan Railway and of 
the Japanese civil administration from Shantung, both 
of which were illegally established. In view of these 
conclusions, we cannot but be constrained to reach the 
conclusion that Japan has held the leased territory of 
Kiaochow as against the rights of China since China’s 
declaration of war on August 24, 1917, and that she 
has acquired the German rights in the Kiaochow-Chinan 
Railway and the adjoining mines in violation of China’s 
neutrality and sovereignty and in defiance of her re- 
peated protests. Hence Japan is under legal and moral 
obligation to return to China the leased territory of Kiao- 
chow and to place in the custody and possession of the 
Chinese Government the German Kiaochow-Chinan Rail- 
way and the adjoining mines, subject, however, if 
necessary, to some form of proper compensation. 


In view of these conclusions, we affirm that the 
Shantung decision as rendered at the Paris Peace Con- 
ference by the Council of Three on April 30, 1919, was 


THE SHANTUNG QUESTION 447 


unjust. The Council awarded Japan all the German 
rights in Shantung, and, in addition, the right to officer 
the railway police along the Kiaochow-Chinan Railway, 
and to establish a permanent concession in Tsingtao. 

Articles 156, 157, 158, of the Treaty of Peace with 
Germany, embodying this decision, read: 


“Germany renounces, in favor of Japan, all her rights, 
title and privileges—particularly those concerning the 
territory of Kiaochow, railways, mines and submarine 
cables—which she acquired in virtue of the treaty con- 
cluded by her with China on March 6, 1898, and of all 
other arrangements relative to the Province of Shantung. 

“All German rights in the Tsingtao-Tsinanfu Railway, 
including its branch lines together with its subsidiary 
property of all kinds, stations, shops, fixed and rolling 
stock, mines, plant and material for the exploitation of 
the mines, are and remain acquired by Japan, together 
with all rights and privileges, attaching thereto. 

“The German state submarine cables from Tsingtao 
to Shanghai and from Tsingtao to Chefoo, with all the 
rights, privileges and properties attaching thereto, are 
similarly acquired by Japan, free and clear of all charges 
and encumbrances. (Art. 156.) 

“The movable and immovable property owned by the > 
German state in the territory of Kiaochow, as well as 
all the rights which Germany might claim in consequence 
of the works or improvements made or of the expenses 
incurred by her, directly or indirectly in connection with 
this territory, are and remain acquired by Japan, free 
and clear of all charges and encumbrances. (Art. 157.) 

“Germany shall hand over to Japan within three months 
from the coming into force of the present treaty the 
archives, registers, plans, title deeds and documents of 
every kind, wherever they may be, relating to the admin- 
istration, whether civil, military, financial, judicial or 
other, of the territory of Kiaochow. 

“Within the same period Germany shall give particu- 
lars to Japan of all treaties, arrangements or agreements 


448 PROBLEMS ARISING SINCE THE WAR 


relating to the rights, title or privileges referred to in the 
two preceding articles.” (Art. 158.) 


It will be seen that the rights conferred upon Japan 
were not those belonging to Germany, but those legiti- 
mately belonging to China, as we hold that the German 
rights had automatically reverted to China upon the dec- 
laration of war on August 14, 1917. Hence the Council 
of Three has awarded to Japan the rights, not of Ger- 
many, but of China,—not of an enemy, but of an ally or 
associate in the war. As the Chinese Peace Delegation 
at Paris put it: “It appears clear that the Council has 
been bestowing to Japan rights, not of Germany, but of 
China; not of the enemy, but of an ally. A more power- 
ful ally has reaped benefits at the expense, not of the 
common enemy, but of a weaker ally.” *° 

What is worse, the Council of Three has awarded these 
legitimate rights of China to Japan—a state that has per- 
petuated the crime of violation of China’s neutrality and 
sovereignty. Instead of requiring the offending state to 
restore the former German rights to the rightful sover- 
eign owner, which should be the dictates of reason and 
conscience, the Council condoned and encouraged Japan’s 
conduct by awarding her the German rights in Shan- 
tung. The inconsistency is all the more glaring when it 
is seen that, in the case of Germany, her violation of 
Belgian neutrality was so severely condemned and pen- 
alized, but in the case of Japan, for her violation of 
China’s neutrality, especially in view of the absence of 
any ground of military necessity, she was not only not 
penalized, but on the contrary, awarded the rights, not 
of Germany, but of China,—a friendly ally and loyal 
associate in the war.*® 

It may, however, be contended that, unjust as the 
Shantung decision might be, the Allied Powers were 
bound by the secret agreements of February and March, 
1917, to award the German rights in Shantung to Japan.*? 


THE SHANTUNG QUESTION 449 


It must, nevertheless, be observed that these secret agree- 
ments were made prior to the acceptance of Mr. Wilson’s 
peace terms as set forth in his address to the United 
States Congress, January 8, 1918, and in his subsequent 
speeches, and hence were abrogated by the subsequent 
acceptance of his principles of peace. To this effect, 
testimony was put on record before the Senate Commit- 
tee on Foreign Relations as follows: 


ry 


*. . . On looking over the addresses of President Wil- 
son and the statement made by Secretary Lansing to the 
German Government with regard to the bases of peace, I 
found this (reading) : 
‘The unqualified acceptance by the present 

German Government and by a large majority of 

the German Reichstag of the terms laid down by 

the President of the United States of America in 

his address to the Congress of the United States 

on the 8th of January, 1918, and in his subse- 

quent addresses, justifies the President in mak- 

ing a frank and direct statement of his decision 

with regard to the communications of the Ger- 

man Government of the 8th and 12th of October, 

1918.’ 

“Now as to the subsequent addresses, although there 
is nothing directly bearing upon the question of the four- 
teen points mentioned in the address of January 18, one 
of the subsequent addresses was that on the 4th of July 
at Washington’s Tomb at Mount Vernon in which he 
said: 

‘No half-way decision is conceivable. These 
are the ends for which the associated peoples of 
the world are fighting and which must be con- 
ceded them before there can be peace.’ 

“Then he mentions, one, ‘the destruction of any arbi- 
trary power anywhere,’ and so on, and two is the one to 
which I want to call attention (reading) : 

‘The settlement of every question, whether of 
territory, of sovereignty, of economic arrange- 
ment, or of political relationship, upon the basis 


450 PROBLEMS ARISING SINCE THE WAR 


of the free acceptance of that settlement by the 
people immediately concerned, and not upon the 
basis of the material interest or advantage of 
any other nation or people which may desire a 
different settlement for the sake of its own ex- 
terior influence or mastery.’ 

“I think it was in this memorandum to the President 
that I mentioned this point. I cannot say positively that 
it was in that or some other connection that I called 
attention to this statement and said that my understand- 
ing was that all the powers who entered into the agree- 
ment for the negotiation of peace after the armistice of 
November 11 practically accepted the bases of peace as 
laid down by the American Government and that this 
was one of the bases of peace, and that no exception, 
no reservation, had been made to this by any of the 
Powers, by Great Britain, France, or Japan, although 
Great Britain did make reservations with regard to some 
other things, and that therefore it seemed to me that 
any. prior arrangement such as these secret treaties be- 
tween Great Britain and Japan and between France and 
Japan ought not to be held any longer in force because 
they were really abrogated by the acceptance of these 
bases of peace.” *° 


It may be further contended that the Shantung deci- 
sion in favor of Japan was necessary to prevent Japan’s 
leaving the Paris Peace Conference, and thus to save the 
League of Nations just on the eve of formation. In 
fact, that was the opinion of Mr. Wilson, and probably 
the real reason for his decision.®® It must, however, be 
considered that the fear of Japan’s withdrawal from 
the Conference or refusal to sign the Treaty was not 
well founded. It is unlikely that Japan would exclude 
herself from the League for the loss of the former 
German rights in Shantung. Secretary Lansing testified 
before the Senate Committee on Foreign Relations that 
he believed Japan would have signed the Treaty even 
though the decision should have been against her, the 
main consideration being membership in the League: *° 


THE SHANTUNG QUESTION 451 


“SENATOR JOHNSON of California. Would the Japa- 
nese signatures to the League of Nations have been ob- 
tained if you had not made the Shantung agreement? 

“SECRETARY Lansinc. I think so. 

“SENATOR JOHNSON of California. You do? 

“SECRETARY Lansinc. I think so. 

“SENATOR JOHNSON of California. So that even 
though Shantung had not been delivered to Japan, the 
League of Nations would not have been injured? 

“SECRETARY Lansinc. I do not think so. 

“SENATOR JOHNSON of California. And you would 
have had the same signatories that you have now? 

“SECRETARY LANSING. Yes; one more, China. 

“SENATOR JOHNSON of California. One more, China. 
So that the result of the Shantung decision was simply 
to lose China’s signature rather than to gain Japan’s? 

“SECRETARY Lansinc. That is my personal view, but 
I may be wrong about it.” 


Granted for argument’s sake that there was real dan- » 
ger of Japan’s leaving the Conference or refusing to 
become a member of the League, it is manifest that the 
decision was rendered on the ground of expediency rather 
than that of intrinsic justice. While it is admitted that 
expediency, when not involving questions of morality, 
may become a guiding principle of statesmanship, it must 
be maintained, nevertheless, that when moral issues are 
involved, expediency must be subordinated to morality. 
In other words, in statesmanship, as in life, morality 
must reign supreme, notwithstanding the considerations 
of expediency. : 


Passing from the injustice of the Shantung decision, 
we now come to consider Japan’s policy in relation to 
Shantung itself. In the statement made by Mr. Wilson, 
August 6, 1919,41 the policy of Japan relative to Shan- 
tung was said to be as follows: 


“The policy of Japan is to hand back the Shantung 
Peninsula in full sovereignty to China, retaining only the 


452 PROBLEMS ARISING SINCE THE WAR 


economic privileges granted to Germany, and the right 
to establish a settlement under the usual conditions at 
Tsingtao. : 

“The owners of the railway will use special police only 
to insure security for traffic. They will be used for 
no other purpose. 

“The police force will be composed of Chinese, and 
such Japanese instructors as the directors of the rail- 
way may select will be appointed by the Chinese Gov- 
ernment.” 


Taking this as the policy of Japan, it will be noticed 
that she presumed to have in her possession the sover- 
eignty of Shantung which she had in no way acquired, 
and which was expressly reserved in the lease conven- 
tion of March 6, 1898. Whatever sovereignty is now 
in her possession must have been acquired in violation 
of China’s neutrality and sovereignty. And yet Japan 
pledges to return Shantung to China in full sovereignty. 
That is, Japan proposes to return something to China 
which by right is not hers but China’s. 

Probably what she means by the sovereignty of Shan- 
tung is the leased territory of Kiaochow, which she pro- 
posed to return, and, in fact, pledged to do so. If so 
(as we have seen), inasmuch as China’s declaration of 
war, on August 14, 1917, abrogated the lease convention 
of March 6, 1898, and hence recovered to herself the 
rights of the leased territory, Japan is proposing to return 
something to China which by right belongs to China, 
and which Japan has held, ever since the day of China’s 
declaration of war, in contravention of the sovereign 
rights of China. 

It will be further noticed that the second part of 
Japan’s policy is to retain all German economic conces- 
sions in Shantung, including the Kiaochow-Chinan Rail- 
way and the adjoining mines. It is needless to point 
out again that these economic concessions have been 
seized and retained by Japan in violation of China’s 


THE SHANTUNG QUESTION 453 


neutrality and in defiance of China’s repeated protests, 
and that since China’s declaration of war they should 
have been in the custody and possesison of China, pend- 
ing final settlement with Germany at the Peace negotia- 
tion, and that Japan is under moral and legal obliga- 
tions to restore the same to China. And yet Japan pro- 
poses to retain these ill-gotten concessions. 

Again, Japan plans to establish a railway police along 
the Kiaochow-Chinan Railway officered by the Japanese, 
though manned by the Chinese, basing her right to do so 
on the Agreement of September 24, 1918, respecting ad- 
justment of questions concerning Shantung. As has been 
already shown, the agreement in question is void or void- 
able, because of its illegal consideration. Besides, the 
right of police is in excess of the former German rights 
in Shantung. In the agreement of March 21, 1900, re- 
specting the Kiaochow-Chinan Railway regulations,* it 
was specifically stipulated (Art. 16): 


“Tf troops are needed, outside of the hundred li (fifty 
kilometer) zone, they shall be dispatched by the Gov- 
ernor of the Province of Shantung. No foreign troops 
may be employed for this purpose.” 


In the subsequent convention of November 28, 1905,** 
Germany engaged to withdraw her troops from Kiaochow 
and Kaomi to Tsingtao (Arts. 1 and 2); and to leave 
the neutral zone and railway therein to the police of the 
Chinese Government. In view of the limitations of the 
German rights in Shantung, therefore, Japan’s claim to 
establish the railway police along the Kiaochow-Chinan 
Railway is in excess of the German rights and in viola- 
tion of China’s sovereignty. 


The political significance of the Shantung question can- 
not be overestimated. This question represents the his- 
toric issue of the struggle between the Chinese nation 
and the foreign Powers, the issue of territorial sover- 
eignty. Ever since her opening, China was confronted 


454 PROBLEMS ARISING SINCE THE WAR 


with the greatest problem of all her history—that is, how 
to preserve her territorial integrity and political inde- 
pendence in the face of foreign aggression. She at- 
tempted to solve this great problem by the Boxer Uprising 
in 1900, which only plunged her into the depths of humil- 
iation. Failing in this, she brought to pass the Chinese 
Revolution of 1911, aiming to take hold of the reins of 
government and thus to establish a strong and stable 
government for her own protection. Now this Shan- 
tung question represents foreign aggression or encroach- 
ment on the territorial sovereignty of China, which she 
aims to uphold under the egis of the Republic. Hence 
in resisting Japan’s aggression in Shantung, China is sim- 
ply following the tradition of her historical development. 
To win in the Shantung question is to succeed in the 
assertion and maintenance of her territorial sovereignty. 
To fail is to acknowledge servitude. Hence, the Shan- 
tung question will become the battle cry of Chinese na- 
tionalism, and hence the Chinese people, determined as 
they are to preserve their territory and sovereignty, will 
never yield in the Shantung affair. 

Again, this Shantung question represents the conflict 
of Japan’s policies in China and China’s policy for her- 
self. As we recall, Japan aims to exploit the natural 
resources of China, and to establish her position of para- 
mount influence. She also aims to control and domi- 
nate China—by strengthening her influence around and 
in Peking through her dominance in Manchuria and Shan- 
tung. On the other hand, China strives for self-preserva- 
tion—for her independence and sovereignty. She aims 
to preserve what she has, and in addition to recover her 
lost or delegated rights of sovereignty. Hence the Shan- 
tung question represents the conflict of the policies of 
the two nations. 

Further, the Shantung question involves the sanctity 
of international law, the maintenance of which consti- 
tuted one of the objects of the World War. It raises 


THE SHANTUNG QUESTION 455 


the question as to whether the nations are to observe the 
principles of international law or are to relapse into 
anarchy. If they mean to uphold the sanctity of inter- 
national law, they must right the wrong done in the 
Shantung decision. Hence, the successful and right solu- 
tion of the Shantung question means the vindication of 
the sanctity of international law. 

Finally, the Shantung question represents the moral 
issue of might versus right. By virtue of her military 
and naval forces, Japan has acquired the German rights 
in Shantung in evident violation of China’s neutrality 
and sovereignty. On the other hand, because of the 
insufficient backing of force, China has failed to recover 
the rights which should have properly belonged to her. 
If Japan wins eventually in the Shantung question, it 
means an unfortunate reaffirmation of the principle of 
“might makes right.” On the other hand, if China wins, 
it is a successful vindication of the principle of “Right 
makes might.” 

As to remedies for the Shantung question, there are 
three. First, Japan may change her policy and so suc- 
cessfully solve the question. But this is scarcely to be 
expected, at least in the immediate future. She will stand 
by the agreement of September 24, 1918, and the Treaty 
of May 25, 1915, or still better, the original Twenty-one 
Demands. She will also stand by the Shantung decision 
as embodied in Articles 156, 157, 158 of the Treaty of 
Peace with Germany, which gives a legal sanction to 
her position in Shantung. It is therefore reasonable to 
expect that, in the absence of other adequate remedies, 
Japan will not likely yield in the Shantung question in 
any substantial way, unless and until she changes her 
policy toward China as a whole. 

The second remedy is the League of Nations or Con- 
ference of Powers. Will the League or Conference 
reconsider the question and right the wrong of the Shan- 
tung decision ?—That is the question which few will dare 


456 PROBLEMS ARISING SINCE THE WAR 


to answer. Be it as it may, it is within reason to believe, 
however, that the League or Conference will have to take 
into consideration the pride and honor of Japan, for the 
maintenance of which Japan will do all in her power to 
prevent a reconsideration of the question. It is also rea- 
sonable to expect that in case of a renewal of the Anglo- 
Japanese Alliance, unless Great Britain in the Conference 
or League is released from the obligation, she will be 
obligated to support Japan in the Council and the Assem- 
bly, which means that, in the case of the League, China 
cannot get.a unanimous report or recommendation from 
the Council or a report or recommendation from the 
Assembly concurred in by all the members represented on 
the Council and a majority of the other members, exclu- 
sive in each case of the parties to the dispute, which is 
requisite to give the report or recommendation the sanc- 
tion of the League, in case one party chooses to comply 
therewith. 

The third remedy is that China should become strong 
herself, and so cause Japan to respect her rights. This 
seems to be the shortest, as well as the noblest, way to a 
solution of the question. For Japan’s action in Shan- 
tung is based on the inability of China to uphold her 
rights. As soon as Japan sees that China is able to do 
so, rather than run the gauntlet of a conflict with her, 
Japan will yield. Further, Japan’s policies toward China, 
it will be remembered, are partly founded on China’s 
weakness. The minute China becomes strong, the raison 
d’étre of some of Japan’s policies will be eliminated, and 
she will surely change her attitude and policy in conse- 
quence. Hence, in the absence of a voluntary change of 
policy on the part of Japan and adequate action by the 
League of Nations or Conference of Powers, the remedy 
will lie in the rise of a strong China. 

The basis of solution of the Shantung question is sim- 
ple. Giving due recognition to Japan’s service and sac- 
rifice in the capture of Kiaochow, and paying due regard 


THE SHANTUNG QUESTION 457 


to the sovereignty of China, the principle of the solution 
should be, on the one hand, that Japan may receive, if 
necessary, some form of compensation agreeable to 
China, and, on the other, that, in full recognition of 
China’s sovereignty, Japan should restore to China all 
German concessions in Shantung, including the Kiao- 
chow-Chinan Railway, the adjoining mines, and the 
leased territory, subject, however, to the proviso that 
these concessions should not be mortgaged or alienated 
by China in any way to any other foreign Power. Thus 
Japan would receive her share of reward and China 
would maintain her territorial sovereignty and recover 
her rights. 


Ee ee FP ee Pe yas ETRE oe a tS a paw sibel» om ; Sn Ee m 


After the foregoing was written, the Shantung Ques- 
tion entered upon a new stage of development, which 
deserves our attention. On September 7,.1921, the Japa- 
nese Government submitted to the Chinese Government 
nine proposals as the terms of settlement for the dis- 
pute.*® On October 5, 1921, the Chinese Government 
made reply,*® in general rejecting the proposals. 

In the first proposal, the leasehold of Kiaochow and 
the rights originally granted to Germany with regard 
to the fifty kilometer zone were to be restored to China. 
This is simply a reiteration of the pledge of restoration 
made in the exchange of notes, May 25, 1915. In the 
eyes of the Chinese, this proposal carries no more weight 
than one to restore to China what by rights belongs to 
her. For China regards the leasehold of Kiaochow as 
having been abrogated by her declaration of war against 
German on August 14, 1915, and as one which should 
have reverted to her possession on that date. Hence the 


reply: 


“The lease of Kiaochow expired immediately on 
China’s declaration of war against Germany. Now that 
Japan is only in military occupation of the leased terri- 


458 PROBLEMS ARISING SINCE THE WAR 


tory the latter should be wholly returned to China with- 
out conditions. There can be no question of any lease- 
hold.” : 


The second proposal offered to surrender the claim 
to an exclusive Japanese settlement or an international 
concession in Tsingtao as was stipulated in the exchange 
of notes, May 25, 1915. This abandonment, however, 
was to be made on conditions that would safeguard the 
economic interests of the Japanese and other foreigners. 
First, China was to “open of its own accord the entire 
leased territory of Kiaochow as a port of trade,” which 
was also a reiteration of a stipulation in the exchange 
of notes, May 25, 1915. Second, China was “to permit 
the nationals of all foreign countries freely to reside and 
to carry on commerce, industry, agriculture or any other 
lawful pursuits within such territory,’ the pursuit of 
agriculture being specifically mentioned, which was gen- 
erally considered as an occupation open to the citizens 
or natives only. Third, China undertook “to respect the 
vested interests and rights of all foreigners, regardless 
of the validity of acquisition. Fourth, she would like- 
wise “carry out forthwith the opening of suitable cities 
and towns within the Province of Shantung for residence 
and trade of the nationals of all foreign countries,’ which 
was one of the stipulations of the Treaty of May 25, 
1915. Fifth, regulations for the opening of places under 
the foregoing clauses should be determined by the Chinese 
Government with the Powers interested. 

In reply, China welcomed the surrender of the claim 
to an exclusive settlement or an international conces- 
sion and also pointed out that, inasmuch as China had 
on previous occasions declared her intention to open Kiao- 
chow as a commercial port for the convenience of trade 
and residence of the nationals of all friendly nations, 
there could be “no necessity for the establishment of any 
purely foreign settlement again.” She objected particu- 


THE SHANTUNG QUESTION 459 


larly to the inclusion of agriculture among the pursuits 
allowed to foreigners. 


“Agricultural pursuits concern the fundamental means 
of existence of the people of a country; and according 
to the usual practice of all countries, no foreigners are 
permitted to engage in them.” | 


She declined to concede indiscriminate recognition to all 
vested interests and rights of foreigners, but pointed out 
the difference between those legitimately acquired under 
the German régime and those illegally possessed during 
the Japanese military occupation. 


“The vested rights of foreigners obtained through law- 
ful processes under the German régime shall of course 
be respected, but those obtained by force and compulsion 
during the period of Japanese military occupation and 
against law and treaties can in nowise be recognized.” 


She also objected to the idea of being called upon to open 
cities and towns in Shantung as commercial ports, and 
declared that ‘‘the opening of such places should neverthe- 
less be left to China’s own judgment and selection in 
accordance with circumstances,” plainly maintaining her 
own full sovereignty. She further declined to enter into 
previous negotiations as to the regulations governing the 
opening of such places, thus again asserting the prin- 
ciple of sovereignty, although conceding that she would 
“undoubtedly bear in mind the object of affording facili- 
ties to international trade and formulate them according 
to established precedents of self-opened ports.” 


In the third proposal, the joint enterprise was proposed 
of the Kiaochow-Tsinanfu Railroad, as stipulated in the 
Agreement of September 24, 1918, respecting the con- 
trol of the Kiaochow Railway, and also of the mines 
appurtenant thereto. To this China strenuously objected 


460 PROBLEMS ARISING SINCE THE WAR 


on the ground not only of the illegal acquisition in con- 
sequence of the violation of China’s neutrality and sov- 
ereignty, but also of the undesirability of the foreign con- 
trol of railways and the necessity of unification and 
nationalization of the same. 


“The joint operation of the Shantung railways, that is, 
the Kiaochou-Tsinanfu line, by China and Japan is ob- 
jected to by the entire Chinese people. It is because in 
all countries there ought to be a unified system for rail- 
ways, and the joint operation destroys unity of railway 
management and impairs the rights of sovereignty; and, 
in view of the evils of the previous cases of joint opera- 
tion and the impossibility of correcting them, China 
can now no longer recognize it as a matter of principle. 
The whole line of the Shantung Railway, together with 
the right of control and management thereof, should be 
completely handed over to China: and after a just valua- 
tion of its capital and properties, one-half of the whole 
value of the line not returned shall be purchased back 
by China within a fixed period. As to the mines appur- 
tenant to the Shantung Railway which were already oper- 
ated by the Germans, their plan of operation shall be 
fixed in accordance with the Chinese Mining Laws.” 


The fourth proposal offered to renunciate the prefer- 
ential rights with regard to foreign assistance in persons, 
capital and material, as stipulated in the Sino-German 
Treaty of March 6, 1898. This would eliminate the wall 
of preferential claims and thus open Shantung to the 
enterprise of all foreigners, indicating the desire of the 
Japanese to maintain equality of commercial opportuni- 
ties. To this favorable proposal China was not opposed, 
and hence she made no reply thereto. Upon a closer 
examination, however, this apparent renunciation is tan- 
tamount to a surrender of something which Japan has 
not acquired. Maintaining as we do that the Kiaochow 
Lease Convention of March 6, 1898, which embodied the 


2 


THE SHANTUNG QUESTION 461 


preferential clause, was abrogated by China’s declaration 
of war against Germany, it is but plain that the German 
rights of preference were nullified upon the declaration 
of hostility. While Japan might claim that the treaty 
of peace with Germany, June 28, 1919, awarded her the 
German rights in Shantung, it is to be maintained that 
China did not sign that treaty and thus refused to recog- 
nize the validity of the award. While voluntary renun- 
ciation on the part of Japan might be commendable, her 
proposal did not harmonize with the fundamental con- 
viction and principle of the Chinese. 


In the fifth proposal, the extensions of the Kiaochow- 
Tsinanfu Railway, as provided in the agreement of Sep- 
tember 24, 1918, respecting the construction of the 
Tsinan-Shunteh and Kaomi-Shuchou railways, and the 
options for the construction of the Yentai-Weihsien Rail- 
way as stipulated in the treaty of May 25, 1915, respect- 
ing Shantung, were to be thrown open for the common 
activity of the international financial consortium. Inas- 
much as the exchange of letters between Thomas W. 
Lamont and N. Kajiwara on May 11, 1920, and the 
Japanese entrance into the New International Banking 
Consortium placed these railway concessions within the 
scope of the New Consortium, this proposal was deemed 
as a mere statement of a situation already in existence. 
The reply was therefore made: 


“With reference to the construction of the extension 
of the Shantung Railway, that is, the Tsinan-Shunteh 
and Kiaochow-Houchou lines, China will, as a matter of 
course, negotiate with international financial bodies.” 


But as the Chefoo-Weihsien Railway concession was ex- 
acted under duress by the treaty of May 25, 1915, which 
should be either abrogated or revised, the suggestion 
thereabout was deemed to be “entirely a different case” 
and could not “be discussed in the same category.” 


462 PROBLEMS ARISING SINCE THE WAR 


The sixth proposal tendered to make the status of the 
customs house at Tsingtao as forming an integral part 
of the general customs system of China clearer than un- 
der the German régime. Inasmuch as the full control of 
the customs house at Tsingtao was considered as a natural 
consequence of the restoration of Kiaochow Leased Ter- 
ritory, China contended that the status of the Tsingtao 
Customs House should be the same as that of any other 
Chinese customs house. 


“When the leased territory is restored, the customs 
house thereat should be placed under the complete con- 
trol and management of the Chinese Government and 
should not be different from the other customs houses in 
its system of administration.” 


In the seventh proposal, public property used for ad- 
ministrative purposes within the leased territory of Kiao- 
chow was tendered to be transferred to China, but as 
to the maintenance and operation of public works and 
establishments, special arrangement was to be made be- 
tween the Japanese and Chinese governments. This pro- 
posal volunteered the transfer of public property used 
for administrative purposes, but still insisted on previous 
negotiation or special arrangement for the disposal of 
public works and establishments, which constituted one 
of the four conditions attached to the Japanese pledge 
of restoration of Kiaochow as embodied in the exchange 
of notes, May 25, 1915. Inasmuch as all public proper- 
ties, either for administrative purposes or otherwise, 
should be returned with the restoration of the leased 
territory without special arrangements, the proposal was 
therefore rejected: 


“The extent of public properties is too wide to be 
limited only to that portion used for administrative pur- 
poses. If it is the sincere wish of Japan to return all 
the public properties to China, she ought to hand over 
completely the various kinds of official, semi-official, mu- 


THE SHANTUNG QUESTION 463 


nicipal and other public properties and enterprises to 
China to be distributed according to their nature and 
kind, to the administrations of the central and local 
authorities, to the municipal council and to the Chinese 
customs, etc., as the case may be. Regarding this there 
is no necessity for any special arrangement.” 


The eighth item proposed the appointment of repre- 
sentative commissioners by the Chinese and Japanese 
governments to arrange detailed plans “for carrying into 
effect the terms of settlement above indicated and for 
the purpose of adjusting other matters not embodied 
therein.” To this suggestion China made no reply. 


The ninth and last term of settlement tendered the 
withdrawal of Japanese troops along the Kiaochow- 
Tsinanfu Railway upon the organization by China of 
a police force to take over the protection of the line. 
This offer was, however, accompanied by the reserva- 
tion that the question of the organization of a special 
police guarding the railway should be reserved for fu- 
ture consideration between Japan and China. This 
exception signified that Japan still held on to the claim 
of establishing a police force trained and controlled by 
the Japanese, as stipulated in Article 4 of the Agree- 
ment of September 24, 1918, respecting the control of 
the Kiaochow-Tsinanfu Railway. As this proposal was 
tantamount to the original claim of a police force trained 
and controlled by the Japanese, and as the agreement 
in question of September 24, 1918, was considered invalid 
or voidable, and since the presence of Japanese troops 
infringes her sovereignty, China could not but decline 
the offer: 


“The question of the withdrawal of Japanese troops 
of Shantung Province bears no connection with the 
restoration of the Kiaochow Leased Territory and the 
Chinese Government has urged repeatedly for its actual 


464 PROBLEMS ARISING SINCE THE WAR 


execution. It is only proper that the entire Japanese 
Army of Occupation should now be immediately evacu- 
ated. As to the policing of the Kiaochow-Tsinan Rail- 
way, China will immediately send a suitable force of 
Chinese railway police to take over the duties.” 


From the above terms of settlement as offered by 
Japan, it can be seen that what Japan tendered to sur- 
render was not hers by right, but rather what she should 
have given up. Inasmuch as the Kiaochow Leased Con- 
vention of March 6, 1898, is regarded as abrogated with 
the declaration of war, the Kiaochow Leasehold and the 
German preferential rights have therewith been nulli- 
fied. As the exchange of letters between Thomas W. 
Lamont and N. Kajiwara on May 11, 1920, placed the 
extensions of the Shantung Railway within the scope 
of the New International Banking Consortium, the rail- 
ways in question should have become open to the com- 
mon activities of the New Consortium. The only term 
of settlement that might be commended and regarded 
with favor is the offer to surrender the claim to an 
exclusive Japanese settlement or an international con- 
cession, but this is offset by a requirement to recognize 
all vested interests and rights acquired during the Japa- 
nese military occupation, legitimate or illegitimate. 

On the other hand, it is also plain that Japan did 
not propose to surrender any vital interests, or to meet 
any fundamental objections of the Chinese. She still 
insisted on the joint enterprise of the Kiaochow-Tsinanfu 
Railway, future negotiation regarding the organization of 
the railway police, special arrangement for the disposal 
of public works and establishments, clearer definition of 
the status of the customs house at Tsingtao, and the rec- 
ognition of vested interests acquired by foreigners legiti- 
mately or otherwise. In short, Japan still aims to achieve 
economic domination in Shantung. She made no con- 
fession of her mistake or crime in landing her troops 


THE SHANTUNG QUESTION 465 


at Lungkow and then marching through the Chinese 
territory and seizing the Kiaochow-Tsinanfu Railway 
and the adjoining mines, and thus failed to recognize and 
respect the fundamental principle of the sovereignty of 
China. She still ignored the basic contention of the 
Chinese that China’s declaration of war abrogated all 
treaties, conventions and agreements with Germany, in- 
clusive of the Kiaochow Leasehold, and that China thus 
recovered to herself all the former German concessions. 
She further failed to concede that her possession of Ger- 
man rights in Shantung was validated, neither by the 
treaty of May 25, 1915, which was concluded under 
duress, nor by the Agreement of September 24, 1918, 
respecting the control of the Kiaochow-Tsinanfu Rail- 
way, which was entered upon for illegal consideration, 
nor by the Treaty of Peace with Germany, June 28, 
1919, to which China was not a contracting party. 
~The Chinese Government therefore prefaced the reply 
with a declaration of disappointment over the terms of 
settlement and the failure of Japan to meet the funda- 
mental contentions and objections of the Chinese. 


“With reference to the important Shantung Question 
which is now pending between China and Japan, China 
has indeed been most desirous of any early settlement for 
the restitution of her sovereign rights and territory. The 
reason why China has not until now been able to com- 
mence negotiations with Japan is because of the fact 
that the basis upon which Japan claims to negotiate are 
all of a nature either highly objectionable to the Chinese 
Government and the Chinese people, or such to which 
they have never given their recognition. Furthermore, 
in regard to the Shantung Question, although Japan has 
made many vague declarations she has in fact had no 
plan which is fundamentally acceptable. Therefore, the 
case has been pending for many years much to the unex- 
pectation of China. On September 7 Japan submitted 
certain proposals for the readjustment of the Shantung 
Question in the form of a memorandum together with 


466 PROBLEMS ARISING SINCE THE WAR 


a verbal statement by the Japanese Minister to the effect 
that in view of the great principle of Sino-Japanese 
friendship Japan has decided upon this fair and just 
plan as her final concession, etc. After careful con- 
sideration the Chinese Government feels that much in 
Japan’s new proposals is still incompatible with the 
repeated declarations of the Chinese Government, with 
the hopes and expectations of the entire Chinese people, 
and with the principles laid down in treaties between 
China and the foreign Powers. If these proposals are 
to be considered the final concession on the part of Japan, 
they surely fall short to prove the sincerity of Japan’s 
desire to settle the question.” 


Consequent to the rejection of the terms of settlement, 
and anxious to reach’a solution of the Shantung Ques- 
tion at an early date, the Chinese Government made the 
reservation at the conclusion of the reply “of seeking a 
solution of the question whenever a suitable occasion 
presents itself,” apparently giving the hint that, with 
a concurrence of the Powers interested, the Shantung 
Question might be made a subject for discussion among 
the Powers. 


NOTES TO CHAPTER XXVII 


1. Millard, Our Eastern Question, p. 91. 

2. The Chino-Japanese Negotiations, the Chinese Official 
Statement, 1915, p. 19. 

ee Cay ts hig Ve i 

4. MacMurray, Treaties and Agreements with and Concerning 
China, 1917/7. 

5. Questions for Readjustment, submitted by China to the 
Paris Peace Conference, 1919, p. 82. 

6. Hertslet’s China Treaties, Vol. 1, No. 59, p. 351; also see 
chapter on Leased Territories. 

7. Cf. The Shantung Question, p. 40. 

8. MacMurray, 1917/7. 

9. Cushing, Att. Gen., 1855, 7 op. 367, cited in J. B. Moore, 
Vol. 7, p. 1089. 

10. The Shantung Question, submitted by China to the 
Paris Peace Conference, published by the Chinese National Wel- 
fare Society, March, 1920, p. 40. 


THE SHANTUNG QUESTION 467 


11. Note from the. Ministry of Foreign Affairs to the 
Japanese Minister at Peking protesting against violation of neu- 
trality, Sept. 27, 1914, The Shantung Question, op. cit., p. 58. 

12. Ministry of Foreign Affairs to Japanese Minister at 
Peking, Sept. 30, 1914, The Shantung Question, op. cit., p. 59. 

13. Japanese Minister at Peking to the Chinese Ministry of 
Foreign Affairs, Oct. 2, 1914, The Shantung Question, ibid., pp. 

14. J. B. Moore, International Law Digest, Vol. 7, p. 1101. 

15. Ibid., Vol. 5, p. 384. 

16. Kent, Comm. I, 176, cited in J. B. Moore, Vol. 5, p. 385n. 

17. Fiore’s Internatl Law Codified, translated by E. M. 
Borchard, p. 538. 

18. Calvo, Droit Int. (4th Ed.), IV, 65, Sec. 1931, cited in 
J. B. Moore, Vol. 5, p. 385. 

19. J. B. Moore, Columbia Law Review, Apr., 1901, Vol. 1, 
No. 4, a 209-223, pp. 217-218; J. B. Moore, Int’natl. Law Dig., 
Vol. 5, 83. 

20. The Chino-Japanese Negotiations, op. cit., p. 49, Art. 1, 
Treaty of 1915 respecting Shantung. 

21. The Shantung Question, pp. 17-18. 

Ze; J.B. Moore, op.tit., Vol 5, p. 183. 

23. Fiore’s Int’natl. Law Codified, op. cit., p. 332. 

24. The Chino-Japanese Negotiations, op. cit., pp. 4-5. 

24A. Ibid., p. 35. 

25. Ibid., pp. 40-41. 

26. Cf. Hearings before the Committee on For. Rel., U. S. 
Sen., 66th Cong., Ist Sess., Sen. Document No. 106, on Treaty 
of Peace with Germany signed at Versailles on June 28, 1919, 
pp. 561-562, testimony of Mr. Ferguson. 

27. The Shantung Question, pp. 67-68. 

P62) De eote, lop. cra, Voll 5, ps 183. 

29. The Shantung Question, p. 42. 

30. Ibid., p. 42. 

31. Cf. Statements by the Chinese Peace Delegation, May 3, 
1919, Millard’s Review, Supp., July 17, 1920, p. 10. 

32. Cf. Hearings, op. cit., pp. 444-445, Mr. T. F. Millard’s 
testimony. 

33. For the text of the agreement, see The Shantung Ques- 
tion, op. cit., pp. 66-70. 

34. This declaration was officially presented to, and taken 
cognizance of, by the Allied and associated Governments—the 
statement by the Chinese Peace Delegation, May 3, 1919, Mil- 
lard’s Review, Supp., July 17, 1920, p. 10. 

35. Statement by the Chinese Peace Delegation, ibid. 

36. It should be further observed that inasmuch as the Kiao- 
chow lease convention stipulated that Germany should engage 
not to sublet the leasehold to any other state, the Shantung 
decision violated the sanctity of this treaty obligation. 

37. For the secret agreements, see Millard’s Review, Supp., 
July 17, 1920, pp. 1-3. 


468 PROBLEMS ARISING SINCE THE WAR 


38. Hearings, op. cit., pp. 622-623, the testimony of Professor 
E. T. Williams. 

39. Cf. Hearings, Conference at White House, Aug. 19, 1919, 
pp. 531-532. 

40. Hearings, Senate Doc. No. 106, op. cit., p. 182. 

41. N. Y. Times, Aug. 7, 1919; Millard’s Review, Supp., July 
17, 1920, p. 16; also see Chas. B. Elliott, The Shantung Ques- 
tion, American Journal of Internatl. Law, Vol. 13, 1919, p. 728. 

42. The Shantung Question, pp. 50-54. 

43-44. Ibid., pp. 54-56; Sen. Hearings, Sen. Doc. No. 106, op. 
cit., p. 561, the testimony of Mr. Ferguson. 

45. Copy furnished by the Chicago Daily News, dispatch by 
the Associated Press. 

(1) The leasehold of Kiaochow and the rights originally 
granted to Germany with regard to the fifty kilometer zone 
around the Kiaochow Bay shall be restored to China. 

(2) The Japanese Government will abandon plans for the 
establishment of a Japanese exclusive settlement of an open 
international settlement in Tsingtao: Provided that China 
engages to open of its own accord the entire leased territory of 
Kiaochow as a port of trade and to permit the nationals of all 
foreign countries freely to reside and to carry on commerce, 
industry, agriculture or any other lawful pursuits within such 
territory, and that she further undertakes to respect the vested 
rights of all foreigners. China shall likewise carry out forth- 
with the opening of suitable cities and towns within the province 
of Shantung for residence and trade of the nationals of all for- 
eign countries. Regulations for the opening of places under 
the foregoing clauses shall be determined by the Chinese Gov- 
ernment upon consultation with the powers interested. 

(3) The Kiaochow-Tsinanfu Railway and all mines appur- 
tenant thereto shall be worked as a joint Sino-Japanese enter- 
prise. 

(4) Japan will renounce all preferential rights with regard to 
foreign assistance in persons, capital and material, stipulated in 
the Sino-Gcrman Treaty of March 6, 1898. 

(5) Rights relating to the extensions of the Kiaochow- 
Tsinanfu Railway, as well as options for the construction of the 
Yentai-Weihsien Railway, will be thrown open for the common 
activity of the international financial consortium in China. 

(6) The status of the customs house at Tsingtao as forming 
an integral part of the general customs system of China shall 
be made clearer than under the German régime. 

(7) Public property used for administrative purposes within 
the leased territory of Kiaochow will, in general, be trans- 
ferred to China; it being understood that the maintenance and 
operation of public works and establishments shall be arranged 
between the Japanese and Chinese Governments. 

(8) With a view to arranging detailed plans for carrying into 
effect the terms of settlement above indicated and for the pur- 
pose of adjusting other matters not embodied therein, the Jap- 


THE SHANTUNG QUESTION 469 


anese and Chinese Governments shall appoint their representative 
commissioners as soon as possible. : 

(9) The Japanese Government have on more than one occasion 
declared willingness to proceed to the recall of Japanese troops 
now stationed along the Kiaochow-Tsinanfu Railway upon 
organization by China of a police force to assume protection 
of the railway. As soon as the Chinese Government shall have 
organized such a police force and notified the Japanese Govern- 
ment to that effect, Japanese troops will be ordered to hand over 
to the Chinese police the charge of the railway protection, and 
thereupon immediately to withdraw. It is, however, to be under- 
stood that the question of the organization of a special police 
guarding the Kiaochow-Tsinanfu Railway shall be reserved for 
future consideration between Japan and China. 

46. Copy furnished by the Chinese Legation, Washington, 
D. C. With reference to the important Shantung Question 
which is now pending between China and Japan, China has 
indeed been most desirous of an early settlement for the restitu- 
tion of her sovereign rights and territory. The reason why 
China has not until now been able to commence negotiations 
with Japan is because of the fact that the basis upon which 
Japan claims to negotiate are all of a nature either highly 
objectionable to the Chinese Government and the Chinese people, 
or such to which they have never given their recognition. Fur- 
thermore, in regard to the Shantung Question, although Japan 
has made many vague declarations she has in fact had no plan 
which is fundamentally acceptable. Therefore the case has been 
pending for many years much to the unexpectation of China. 
On September 7 Japan submitted certain proposals for the 
readjustment of the Shantung Question in the form of a 
memorandum together with a verbal statement by the Japanese 
Minister to the effect that in view of the great principle of Sino- 
Japanese friendship Japan has decided upon this fair and just 
plan as her final concession, etc. After careful consideration 
the Chinese Government feels that much in Japan’s new pro- 
posals is still incompatible with the repeated declarations of the 
Chinese Government, with the hopes and expectations of the 
entire Chinese people, and with the principles laid down in 
treaties between China and the Foreign Powers. If these pro- 
posals are to be considered the final concession on the part of 
Japan, they surely fall short to prove the sincerity of Japan’s 
desire to settle the question. For instance: 

(1) The lease of Kiaochow expired immediately on China’s 
declaration of war against Germany. Now that Japan is only in 
military occupation of the leased territory the latter should be 
wholly returned to China without conditions. There can be no 
question of any leasehold. 

(2) As to the opening of Kiaochow Bay as a commercial port 
for the convenience of trade and residence of the nationals of 
all friendly powers, China has already on previous occasions 
communicated her intentions to do so to the Powers, and there 


470 PROBLEMS ARISING SINCE THE WAR 


can be no necessity for the establishment of any purely foreign 
settlement again. Agricultural pursuits concern the fundamental 
means of existence of the people of a country; and according 
to the usual practice of all countries, no foreigners are per- 
mitted to engage in them. The vested rights of foreigners 
obtained through lawful processes under the German regime 
shall of course be respected but those obtained by force and 
compulsion during the period of Japanese military occupation 
and against law and treaties can in no wise be recognized. And 
again, although this same article in advocating the opening of 
cities and towns of Shantung as commercial ports agrees with 
China’s intention and desire of developing commerce, the open- 
ing of such places should nevertheless be left to China’s own 
judgment and selection in accordance with circumstances. As to 
the regulations governing the opening of such places, China will 
undoubtedly bear in mind the object of affording facilities to 
international trade and formulate them according to established 
precedents of self-opened ports and sees, therefore, no necessity 
in this matter for any previous negotiations. ; 

(3) The joint operation of the Shantung Railway, that is, 
the Kiaochow-Tsinan Line, by China and Japan is objected to 
by the entire Chinese people. It is because in all countries there 
ought to be a unified system for railways, and joint operation 
destroys unity of railway management and impairs the rights of 
sovereignty; and, in view of the evils of the previous cases of 
joint operation and the impossibility of correcting them, China 
can now no longer recognize it as a matter of principle. The 
whole line of the Shantung Railway, together with the right of 
control and management thereof should be completely handed 
over to China; and after a just valuation of its capital and 
properties one-half of the whole value of the line not returned 
shall be purchased back by China within a fixed period. As to 
the mines appurtenant to the Shantung Railway which were 
already operated by the Germans, their plan of operation shall 
be fixed in accordance with the Chinese Mining Laws. 

(5) With reference to the construction of the extension of the 
Shantung Railway, that is, the Tsinan-Shunteh and Kiaochow- 
Hsuchow Lines, China will, as a matter of course, negotiate with 
international financial bodies. As to the Chefoo-Weihsien Rail- 
way, it is entirely a different case, and cannot be discussed in 
the same category. 

(6) The Customs House at Tsintau was formerly situated in 
a leased territory, and the system of administration differed 
slightly from others. When the leased territory is restored, the 
Customs House thereat should be placed under the complete con- 
trol and management of the Chinese Government and should not 
be different from the other Customs Houses in its system of 
administration. 

(7) The extent of public properties is too wide to be limited 
only to that portion used for administrative purposes. The 
meaning of the statement in the Japanese memorandum that such 


THE SHANTUNG QUESTION 471 


property will in principle be transferred to China, etc., rather 
lacks clearness. If it is the sincere wish of Japan to return all 
the public properties to China, she ought to hand over com- 
pletely the various kinds of official, semi-official, municipal 
and other public properties and enterprises to China to be 
distributed, according to their nature and kind, to the admin- 
istrations of the central and local authorities, to the municipal 
council and to the Chinese Customs, etc., as the case may be. 
Regarding this there is no necessity for any special arrangement, 
and 

(9) The question of the withdrawal of Japanese troops from 
the Province of Shantung bears no connection with the restora- 
tion of the Kiaochow Leased Territory and the Chinese Gov- 
ernment has repeatedly urged for its actual execution. It is 
only proper that the entire Japanese Army of Occupation should 
now be immediately evacuated. As to the policing of the Kiao- 
chow-Tsinan Railway, China, will immediately send a suitable 
force of Chinese Railway Police to take over the duties. The 
foregoing statement gives only the main points which are unsat- 
isfactory and concerning which the Chinese Government feels it 
absolutely necessary to make a clear declaration. Further, in 
view of the marked difference of opinion between the two 
countries, and apprehending that the case might long remain 
unsettled, China reserves to herself the freedom of seeking a 
Ve of the question whenever a suitable occasion presents 
itself. 


PAR DOVE 
A FOREIGN POLICY FOR CHINA 


XXVIII. Poricy oF PRESERVATION. 
XXIX. Portcy or RECOVERY. 
XXX. PoLicy OF THE GOLDEN RULE. 
XXXI. Poricy or Wortp WELFARE. 


XXXII. A Porticy Towarp JAPAN IN PARTICULAR. 


2 


bee 
! iy ni ths 


n'y 


vy. A 


XXVIII 
IHE POLICY OF PRESERVATION 


WE have studied the diplomatic history of China, the 
policies of the Great Powers, especially of Japan, the im- 
pairments of China’s sovereignty, and the questions aris- 
ing since the World War. Using these facts and princi- 
ples as a basis, we are now ready to offer suggestions for 
the construction of a foreign policy for China, applicable 
to the present international situation. 

The first policy we would advocate for her is the policy 
of preservation. In view of her history, the policies of 
the Great Powers, particularly Japan, and the new situa- 
tion which has arisen since the Great War, and especially 
in view of the rich and enormous natural resources which 
always tempt Foreign Powers, there is no policy which 
should claim the attention of the Chinese so much as that 
of preservation. Ever since the opening of China, the 
struggle has been between the Great Powers, with their 
aggressive designs and endeavors for exploitation and 
spoliation on the one hand and China, striving to preserve 
her territory and sovereignty, on the other. Shorn of 
all but a few dependencies, and her weakness exposed by 
her defeat by Japan in 1894-5, the Great Powers there- 
after entered into a general scramble for leases and con- 
cessions, which threatened the very integrity of China. 
This was not checked until the blind uprising of the 
Boxers, the inauguration of the Open Door Doctrine by 
the United States, and the advent of the Chinese Revo- 
lution of 1911. Thereafter, the source of danger changed. 
Instead of international rivalry, the Powers pursued a 
policy of international codperation and control, and the 

475 


476 A FOREIGN POLICY FOR CHINA 


only Power that seemed to have inherited the evil prac- 
tices of the others was Japan. With her policy of terri- 
torial expansion in the direction of South Manchuria and 
Eastern Inner Mongolia, and with her design of political 
control, she stood as the foe of China’s territorial in- 
tegrity and political independence. With the advent of 
the New International Banking Consortium, however, 
which, as we have seen, is an incarnation of the Open 
Door Doctrine, Japan’s policies of territorial expansion 
and political control are checked. The advent of the 
New Consortium, however, opens a new source of dan- 
ger to China’s national life, for in case of her default, 
China will be liable to foreclosure and control by the 
Consortium. 


The first measure to be advocated in this policy is that 
China should become strong—that is, she should have a 
strong army and navy and a strong, united Government. 
As one studies the foreign relations of China, one cannot 
but be impressed with the fact that, underlying all her 
troubles, and what made foreign aggression possible, is 
her weakness. Leases and concessions would not have 
been wrested from China except for her inability to re- 
sist spoliation. The Twenty-one Demands would not 
have been presented save for her relative helplessness. 
While this does not exonerate the Powers that committed 
the aggressions, it should, nevertheless, point the moral 
that the weakness of China not infrequently furnished the 
temptation, and made possible the aggrandizement. 

The sovereignty of a state cannot be effectively pre- 
served, except by the possession of an efficient army and 
navy and a strong, united government. Look at the 
nations that have preserved their sovereignty intact and 
unchallenged. They are the states that possess a strong 
army and navy and a strong united government. Japan, 
in particular, furnishes the best illustration. Prior to her 
victory over China, she was subject to foreign aggression 


POLICY OF PRESERVATION 477 


as much as China, but subsequent to the Chino-Japanese 
War, and especially after the Russo-Japanese War, when 
she had demonstrated her prowess and ability, her sov- 
ereignty remained intact and immune from all external 
aggressions; what is more, she recovered her lost, or 
delegated rights of sovereignty. 

For sovereignty presupposes competency. Just as a 
child or an invalid does not enjoy full sovereignty but is 
more or less subject to the control of the mature or strong, 
so, likewise, a state failing to possess power or to be com- 
petent to assume the tasks of a territorial sovereign does 
not enjoy full sovereignty but is liable to be subject to 
the control of the strong state or states. While it is true 
that the League of Nations guarantees the territorial in- 
tegrity and political independence of each constituent 
state, which undoubtedly enhances the security of each 
state, it must, nevertheless, be remembered that the effi- 
cacy of the League, as it now exists, is yet to be proved, 
and that, in the near future, the preservation of the sov- 
ereignty of each state, it seems, will still necessitate the 
possession of adequate physical power and of a compe- 
tent, responsible government. 

Further, the protection of rights requires the possession 
of adequate remedies. In other words, if there is no 
remedy, there is practically no right; or, to put it in 
another way, right exists only so long as remedy exists. 
Prior to the advent of the League of Nations, there was 
no remedy for the protection of the rights of a nation 
other than her own armament and the assistance of her 
allies. It was for this lack of adequate remedies that the | 
nations were driven to enter into the armament race and 
to stabilize the balance of power by counter-balancing al- 
liances. It is also for want of adequate remedies that the 
titanic struggle of the World War came to pass. With 
the inauguration, however, of the League of Nations, 
which provides certain remedies for the protection of the 
rights of nations, thereby securing, or at least aiming to 


478 A FOREIGN POLICY FOR CHINA 


secure, the rights of each member state, in so far as the 
remedies prove to be adequate, the rights of each state 
will undoubtedly be better protected and secured than 
before the formation of the League. But, despite great 
improvement, the rights of each nation are likely to be 
better and more adequately protected and secured by the 
possession of a strong army and navy and a stable united 
government, which can command respect and redress 
wrong, rather than by calling upon the slow-moving and 
cumbersome machinery of the League. 


The second measure to be advocated respecting the 
policy of preservation has to do with foreign loans. The 
source of danger since the Chinese revolution of 1911 
has changed from territorial partition to international 
control. Prior to the Chinese Revolution, the Powers 
struggled for concessions and would not have hesitated to 
dismember China, if possible and beneficial. Since, how- 
ever, the Chinese Revolution, which symbolizes the rise 
of Chinese nationalism and hence the national determina- 
tion of the Chinese people to preserve their heritage and 
liberty, the foreign Powers have seen fit to change their 
policy from international rivalry among themselves and 
territorial partition of China to one of international co- 
operation and control,t which was interrupted only by 
the Great War and which Japan endeavored to forestall 
by the imposition or acquisition of Japanese control, and 
which is, however, revived and resumed by the New 
Consortium representing the combined policy of the 
Powers. Hence the source of danger hereafter will lie, 
not in encroachments upon China’s territorial integrity, 
except possibly from the direction of Japan, but rather 
in the loss or forfeiture of political independence through 
the abuse of foreign loans. For, in case of default or 
bankruptcy, the lending Powers would foreclose and con- 
trol China’s finances, which means the passing of the 


POLICY OF PRESERVATION 479 


political independence of the Chinese. This danger is 
all the more ominous when account is taken of the New 
Consortium. While professing high and noble motives 
in regard to its activities in China, and embodying 
as it does the principles of the Open Door Doc- 
trine, it might be compelled, in case of default or bank- 
ruptcy, which is not improbable nor impossible under the 
existing conditions in China, to demand the control of 
China’s finances, though much to the regret and disap- 
pointment of the authors of the New Consortium. 

To forestall this impending danger, a definite policy 
relative to foreign loans or rather to the entire situation 
as created by the post bellum developments, should be 
formulated. To begin with, the commissions allowed to 
the Chinese officials handling foreign loans must hence- 
forth be abolished and strictly forbidden. As long as 
officials are under the most alluring temptation of acquir- 
ing a fortune through a loan transaction by virtue of the 
commission permitted by the government, so long will 
officials vie with one another to gain the opportunities of 
contracting foreign loans, regardless of consequences. 
Apart from this, foreign loans should henceforth be used 
strictly for constructive or productive purposes, which, 
under normal conditions, insure the return of interest and 
profit and the repayment of the capital, rather than for 
administrative or consumptive purposes, which yield no 
return but which, on the contrary, necessitate the pay- 
ment of the loan through taxes or other loans. Besides, 
there should be a proper system of accounting and audit- 
ing for receipts and expenditures of the loans as well 
as the revenues. As long as the expenditures and re- 
ceipts are not accounted for, nor attested by properly ac- 
credited vouchers, so long will the income of the Gov- 
ernment be exposed to the dangers of extravagance and 
corruption. 

Regarding the railway loans to be advanced by the New 
Consortium, which has, as one of its policies, the inter- 


480 A FOREIGN POLICY FOR CHINA 


nationalization of Chinese railways, the international 
finance of Chinese railways should be permitted, being 
beneficial to China and conducive to the maintenance of 
the Open Door Doctrine. The international administra- 
tion and control of Chinese railways, however, should not 
be countenanced any further than is absolutely necessary, 
since it involves foreign domination of China’s industry 
and commerce, and will also affect her political and stra- 
tegic security. While foreign technical experts and ad- 
ministrative assistants might be employed, executive con- 
trol of railways should not pass into the hands of an 
international board of control, but should always be in 
the hands of the Chinese. 

Further, to increase revenue and to insure sound- 
ness of national credit, the system of taxation must be 
reformed and rehabilitated. As it is a fundamental 
principle of public finance that taxation is the founda- 
tion of public borrowing, the lack or inadequacy of which 
will cause the lowering or breakdown of public credit, 
so the contraction of foreign loans must be accompanied 
by the reform and rehabilitation of taxation, failing which 
serious mishap will inevitably follow, if not actual bank- 
ruptcy. 

Moreover, the finances must be subject to the popular 
control through the agency of Parliament. As long as 
the finances are not supervised by Parliament, but are 
in the hands of the bureaucratic clique, so long will they 
be infested with the evils of abuse, extravagance and cor- 
ruption, which might lead to foreign control. Hence, to 
forestall the danger, popular control of China’s finance 
is the only remedy. 

Finally, the system of taxation and the command of 
the army, now decentralized and controlled by the mili- 
tary governors, should be centralized and controlled by 
the national government, with a view to the eventual abo- 
lition of the Tuchun system and the unification of the 
country. | 


POLICY OF PRESERVATION 481 


The third measure relating to the policy of preser- 
vation has to do with China’s dependencies. Having 
already lost the Loochiu Islands, the Pescadores, Annam, 
Burma, the western part of Ili, Formosa and Korea, she 
must now preserve her remaining dependencies—Man- 
churia, Mongolia, Sinkiang and Tibet. Not only for the 
sake of prestige and honor must she retain the control of 
these dependencies, but also because of the protective 
value of these outlying regions, which shelter her from 
foreign aggressions. To preserve these, and learning 
from past experience, she must first afford them effec- 
tive protection. As long as these territories are not 
adequately protected but are exposed to the aggression 
and conquest of foreign Powers, so long are they liable 
to be taken away from China. The Loochiu Islands, it 
should be remembered, were conquered by Prince Kat- 
suma, of Japan, in 1609, which established her claim to 
the suzerainty thereof, and they were accorded Japanese 
protection in 1871, when, because of the murder of some 
Loochiu shipwrecked sailors on the coast of Formosa by 
the native inhabitants, Japan successfully asserted her 
claims. Ili was occupied by the Russian troops in 1871, 
and the whole of the territory would have been lost had 
it not been for the victorious diplomacy of Marquis Tseng 
and the martial zeal of General Tso Tsung-tang. An- 
nam was subjugated by France and Spain in 1862, the 
share of France being Saigon, three provinces of Cochin- 
China and the Island of Pulo Condor. Burma was van- 
quished by Great Britain, and, in 1862, Lower Burma was 
seized. Thus faliing to afford the necessary protection 
which should be the task of the territorial suzerain, China 
eventually lost these dependencies. 

Furthermore, she must exercise effective and complete 
control of the foreign relations of these dependencies or 
territories. As long as they are permitted to enter into 
direct foreign relations, they will be subject to the ag- 
gressive designs of foreign Powers. To reiterate what 


482 A FOREIGN POLICY FOR CHINA 


has been said, Annam was alienated from China by the 
Treaty of Alliance of March 15, 1874, by which France 
recognized the complete independence of Annam and 
pledged herself to protect the integrity of same, thus sup- 
planting the suzerainty of China, and also by the Treaty 
of August 25, 1883, whereby France established her pro- 
tectorate. Korea was likewise alienated from China by 
the Treaty of February 26, 1876, wherein Japan recog- 
nized the full independence of Korea, thus ignoring the 
-suzerainty of China. Mongolia was permitted to enter into 
the Treaty with Russia of November 3, 1912,? wherein 
Russia pledged herself to uphold the régime of Mongol- 
ian autonomy and at the same time put an injunction on 
the admission of Chinese troops and the colonization of 
the land by the Chinese, which was recognized by China 
in the Convention of November 5, 1913.2 Outer Mon- 
golia was allowed to enter into the Treaty with Russia on 
September 30, 1914,* obligating herself not to grant any 
railway concession without the consent of Russia. The 
tripartite agreement was finally permitted to be entered 
on June 7, 1915,4* between Outer Mongolia, Russia and 
China, which, while prohibiting Outer Mongolia from 
concluding any international treaty regarding political 
and territorial questions, nevertheless required China to 
come to an understanding with Russia on questions of a 
political and territorial nature, thus allowing Russia to 
become the co-suzerain of Outer Mongolia. Again, Tibet 
was permitted to enter into treaty relations with Great 
Britain on September 7, 1904,5 and Outer Tibet would 
have experienced the fate of Outer Mongolia by the tri- 
partite agreement of July 3, 1914,° had the agreement been 
ratified by China. Therefore, for the preservation of 
the remaining dependencies, in addition to affording ef- 
fective protection, China must control the foreign rela- 
tions thereof, or still better, the territories should not 
be permitted to enter into any foreign relations except 
through the Foreign Office of the Chinese Government. 


POLICY OF PRESERVATION 483 


The fourth and last measure in connection with the 
policy of preservation has respect to alliances. As alli- 
ances can make and unmake nations, serious attention 
should be given to this subject. Yet, as the world situa- 
tion is always changing, no definite conclusion can be 
safely ventured. Accordingly, we shall only state some 
general principles governing the matter which can guide 
the action of Chinese statesmen under varying conditions. 
First, in choosing allies, just as in selecting friends or 
partners, the first principle is to see the character and 
policy of the state or states in question. If the state 
or states under consideration should prove to have har- 
bored territorial designs or political ambitions in China, 
then, no matter how attractive the proposition might be, 
such alliances should not be concluded. The secret Li- 
Labonoff Alliance of 1896 should give us the requisite 
warning. Li Hung-Chang, for fear of Japan, accepted 
the proffer of alliance from Russia, and yet, under the 
cloak of this alliance, Russia soon disclosed her territorial 
designs.°“ Again, the alliance between France and An- 
nam in 1874, and that between Japan and Korea in 1894, 
preceding the final establishment of the protectorate or 
annexation, indicates how strong Powers with territorial 
designs and political ambitions often employ the subtile 
means of alliance as a way to gain political control or 
territorial expansion. 

Second, in considering alliances, China should not be 
tempted to enter into the entanglement of the European 
balance of power. To keep away from such entangle- 
ments, Washington advised the United States to stand 
aloof, and Monroe proclaimed the celebrated doctrine 
which has since borne his name. China likewise should 
not permit herself to be dragged into these entanglements 
through the conclusion of such alliances, lest, whenever 
there should be an outbreak of war, resulting from 
changes in the balance of power, China should be com- 
pelled to fight on one side or the other. Rather, she 


484 A FOREIGN POLICY FOR CHINA 


should keep herself aloof from such entanglements and 
be the protector of the Far East and a peacemaker of the 
world. This abstention is rendered all the more impera- 
tive, should China aspire to maintain an Asiatic Monroe 
Doctrine or the Doctrine of the Middle Kingdom in East- 
ern Asia, which we shall discuss later. The successful 
maintenance of such a doctrine will require that, except 
when her own interests or those of humanity are jeopar- 
dized, China should abstain from any intervention in the 
affairs of Europe, just as she desires European Powers 
to keep away from intervention in the affairs of the 
Far East." 


NOTES TO CHAPTER XXVIII 


1. For reasons of this change, vide supra, chapter on the 
International Codperation and Control. 

2. MacMurray, Treaties and Agreements with and Concerning 
China, 1912/12. 

3. MacMurray, 1913/11. 

4. MacMurray, 1914/12. 

4A. MacMurray, 1915/10. 

5. MacMurray, 1906/2. 

6. MacMurray, 1906/2. 

6A. Vide supra, chapter on The Policy of Russia in China. 

7. Vide infra, chapter on The Policy of World Welfare. 


XXIX 
THE POLICY OF RECOVERY 


THE second policy for China is the policy of recovery. 
Inasmuch as China’s sovereignty has been so much im- 
paired by the presence of extraterritoriality and con- 
sular jurisdiction, concessions and settlements, leased 
territories, spheres of interest or influence, the most 
favored nation treatment as practiced in China, and 
tariff autonomy as restricted by conventions, the logical 
policy, next to the policy of preservation, is the policy 
of recovery, that is, the recovery of rights denied her or 
wrested from her, to the end that her sovereignty may 
be made full and complete. 

This policy is indispensable. As long as this régime 
of servitude lasts, so long will China be regarded, not 
as an equal, but rather as an inferior, and this will ever 
remain a source of shame and humiliation. This régime 
also restricts the full exercise of China’s sovereignty 
and hence obstructs her fullest development. Further, 
it is the duty of every state to keep its sovereignty full 
and intact, except in so far as it has voluntarily given 
its assent to certain limitations. Therefore, China owes 
a solemn duty to herself to recover these rights. 

To this policy China seems to have lately committed 
itself. At the Paris Peace Conference of 1919, through 
the Chinese Peace Delegation, she announced her claims 
for the recovery of impaired rights due to her sov- 
ereignty. With respect to extraterritoriality and con- 
sular jurisdiction, she asked that all the treaty powers 
would engage to relinquish their extraterritoriality and 
consular jurisdiction by the end of 1924. With respect 
to foreign troops and police, she requested 

485 


486 A FOREIGN POLICY FOR CHINA 


“that all foreign troops and foreign police agencies now 
present on Chinese territory without legal justification 
be immediately withdrawn; Arts. VII and IX of the 
Protocol of September 7, 1901,* be declared cancelled ; 
and that the legation guards and foreign troops, sta- 
tioned by virtue of these provisions, be completely with- 
drawn within the period of one year from the date when 
a declaration to this effect is made by the Peace Con- 
ference,’ ? 


With reference to foreign postoffices and agencies for 
wireless and telegraphic communication, she asked 


“that all foreign postoffices be withdrawn from China 
on or before January 1, 1921; that no foreign wireless 
or telegraphic installations be set up on Chinese terri- 
tory without the express permission of the Chinese Gov- 
ernment; and that all such installations as may have 
already been set up on Chinese territory shall be handed 
over forthwith to the Chinese Government upon due 
compensation being given.” ? 


Relating to concessions and the settlements she re- 
quested that they be restored to her by the end of 1924.4 
Respecting leased territories, she submitted the request 
that they be restored to her upon her undertaking the 
obligation of the protection of property-owners therein 
and the administration of the territories restored.® 

As regards spheres of influence or interest, she re- 
quested that the various powers interested would each 
for itself make a declaration disclaiming any spheres of 
influence or interest in China and consent to a revision 
of the agreements, or notes, or treaties that have con- 
ferred, or may be construed to have conferred territorial 
advantages or preferential rights.® 

As to tariff autonomy, China made the request that 
at the end of a definite period she should exercise full 
and complete autonomy in tariff regulation, but during 


POLICY OF RECOVERY 487 


the period of transition or probation, she should be per- 
mitted to enter into conventions with the treaty powers, 
so that the tariff conventions should be reciprocal in 
treatment, and differential in regard to luxuries and 
necessaries. She also asked that the rates for neces- 
saries should not be less than 12 1-2 per cent, and that 
“pending the conclusion of such conventions, the present 
tariff shall be superseded ‘by the end of 1921 by the gen- 
eral tariff which is applied to the trade of non-treaty 
powers.” 7 Relative to the most favored nation treat- 
ment, while there was no mention made thereof in the 
published claims of China, it was reported that China 
put in a provision for insertion in the Preliminaries of 
Peace that Germany would engage, as a basis of the 
new treaty of commerce and general relations, “to re- 
linquish therein on her part the principle of the so- 
called most favored nation treatment.” ° 

Besides these claims, which were unsuccessful, the 
Chinese Government, through its Peace Delegation, sub- 
mitted provisions for insertion in the Preliminaries of 
Peace with Germany, most of which tend to illustrate 
the policy of recovery, and a summary of which fol- 
lows: ® 


tek Termination of treaties between China and 
Germany by war and the opening of Tsingtao 
to foreign trade and residence. 

“TI. New treaty of commerce and general relations 
to be based upon the principles of equality and 
reciprocity, with Germany relinquishing that 
of most favored nation treatment. 

“TIT. Withdrawal from Germany of Protocol of 
September 7, 1901. 

“TV. Cession of German public property in Chinese 
territory. 

“V. Compensation for losses of Chinese Govern- 
ment and nationals. 

“VI. Reservation of right of claiming war indemnity. 


488 A FOREIGN POLICY FOR CHINA 


“VII. Reimbursement of expenses for internment 
and maintenance of prisoners of war. 
“VIII.-Restitution of astronomical instruments and 

other works of art. 
“IX. Engagement to ratify International Opium 
Convention of January 23, 1912.” +° 


Similar articles, with slight changes, were also sub- 
mitted for insertion in the Treaty of Peace with Austria. 

Of all these provisions, only three were incorporated, 
with some modifications, in the Treaty of Peace with 
Germany, namely, those relating to the withdrawal from 
the Protocol of September 7, 1901, the cession of Ger- 
man public property in Chinese territory, and the resti- 
tution of astronomical instruments and other works of 
art. The entire list of articles relating to China appears 
however as follows: 


“Germany renounces in favor of China all benefits and 
privileges resulting from the provisions of the final 
protocol signed at Peking on September 7, 1901, and 
from all annexes, notes, and documents supplementary 
thereto. She likewise renounces in favor of China any 
claim to indemnities accruing thereunder subsequent 
to March 14, 1917 (Art. 128). 

“From the coming into force of the present treaty the 
high contracting parties shall apply, in so far as con- 
cerns them respectively ; 


“1. The Arrangement of August 29, 1902, regarding 
the New Chinese Customs Tariff ; 

“2. The Arrangement of September 27, 1905, regard- 
ing Whangpoo, and the provisional supplementary 
Arrangement of September 24, 1912. 


“China, however, will no longer be bound to grant to 
Germany the advantages or privileges which she allowed 
Germany under these arrangements (Art. 129). 

“Subject to the provisions of Section VIII of this 
Part,*4 Germany cedes to China all the buildings, 
wharves and pontoons, barracks, forts, arms and muni- 


POLICY ‘OF RECOVERY 489 


tions of war, vessels of all kinds, wireless telegraphy 
installations and other public property belonging to the 
German Government, which are situated or may be in 
the German concessions at Tientsin and Hankow or 
elsewhere in Chinese territory. 

“It is understood, however, that premises used as 
diplomatic or consular residences or offices are not in- 
cluded in the above cession, and, furthermore, that no 
steps shall be taken by the Chinese Government to dis- 
pose of the German public and private property situated 
within the so-called Legation Quarter at Peking with- 
out the consent of the Diplomatic Representatives of the 
Powers which, on the coming into force of the present 
treaty, remain Parties to the Final Protocol of Septem- 
ber 7, 190) (Art. 130): 

“Germany undertakes to restore to China within 
twelve months from the coming into force of the present 
treaty all the astronomical instruments which her troops 
in 1900-1901 carried away from China, and to defray 
all expenses which may be incurred in effecting such 
restoration, including the expenses of dismounting, pack- 
ing, transporting, insurance and installation (Art. 131). 

“Germany agrees to the abrogation of the leases from 
the Chinese Government under which the German con- 
cessions at Hankow and Tientsin are now held. 

“China, restored to the full exercise of her sovereign 
rights in the above areas, declares her intention of open- 
ing them to international residence and trade. She fur- 
ther declares that the abrogation of the leases under 
which these concessions are now held shall not affect the 
property rights of nationals of Allied and Associate Pow- 
ers who are holders of lots in these concessions. 
CATE. 132). 

“Germany waives all claims against the Chinese Gov- 
ernment or against any Allied or Associated govern- 
ment arising out of the internment of German nationals 
in China and their repatriation. She equally renounces 
all claims arising out of the capture and condemnation 
of German ships in China, or the liquidation, sequestra- 
tion or control of German properties, rights and inter- 
ests in that country since August 14, 1917. This pro- 


490 A FOREIGN POLICY FOR CHINA 


vision, however, shall not affect the rights of the parties 
interested in the proceeds of any such liquidation, which 
shall be governed by the provisions of Part X (eco- 
nomic clauses) of the present Treaty (Art. 133). 

“Germany renounces in favor of the Government of 
His Britannic Majesty the German state property in the 
British concession at Shamen at Canton. She renounces 
in favor of the French and Chinese governments con- 
jointly the property of the German school situated in 
the French concession at Shanghai’ (Art. 134).” 


Similar articles, mutatis mutandis, and except the one 
relating to the restitution of astronomical instruments 
and other works of art, appeared in the Treaty of Peace 
with Austria and Hungary.” 

In addition to these, upon the declaration of war on 
the Central Powers, China abrogated all her treaties 
with them. As a result, she extinguished the extrater- 
ritorial rights of German and Austrian subjects in China. 
She also took over the German concessions at Tientsin 
and Hankow, and the Austrian concession at Tientsin, 
and administered the municipalities therein through the 
Bureaux for the Municipal Administration of the Special 
Areas. In addition, taking advantage of the collapse 
of the old Czaristic régime in Russia, she terminated all 
relations with the old régime by a Presidential Mandate 
of Septen.iber 23, 1920, withdrawing recognition from 
the officials of the old régime and temporarily taking 
over the interests of Russia, pending the eventual estab- 
lishment of a stable government there. She also as- 
sumed the protection of the Chinese Eastern Railway 
belonging to Russia, and, to some extent, regained a par- 
tial control of the line. 


From the above account, it is obvious that China is 
undertaking the policy of recovery. As, however, an 
irresponsible pursuance of this policy may lead to fric- 
tion and even conflict, since the Powers hitherto enjoy- 


POLICY OF RECOVERY 491 


ing special rights are generally reluctant to surrender 
the same, it is essential that we should state certain defi- 
nite principles based on justice and righteousness, which 
should govern the execution of this policy. First, to re- 
cover vested interests, due compensation must be paid. 
As an illustration, if China desires to recover certain 
railway concessions in which foreign capitalists have in- 
vested, she should refund the capital. This principle 
seems to have been followed by the Chinese Government, 
when it asked for the recovery of agencies for wireless 
and telegraphic communications in exchange for due 
compensation.** 

Second, what is vital should be recovered as soon as 
possible. For instance, the leased territories, being all 
strategic bases and indispensable to national defense, 
should be recovered at the earliest possible moment. 
Pending their recovery, these leased territories should be 
neutralized by an international agreement, so that China 
may not be unnecessarily involved in a war in which a 
lessee state is a party, in order that she may better safe- 
guard her own neutrality, and that the experience of 
Kiaochow or Shantung may not be repeated. Con- 
versely, what is not vital to us, and especially what is 
vital to the concessionnaire state, should be treated with 
due caution and consideration. In such cases, while no 
encouragement should be given for retention, due con- 
sideration of the vital interests of the party concerned 
should govern our procedure, to the end that harmony 
and friendship may not be marred. 

Third, and lastly, for whatever rights she ote to 
recover, China should stand prepared to assume the cor- 
responding duties. Rights and duties being correlatives, 
she should always be ready to fulfill the duties for the 
rights to be recovered. For example, to recover ex- 
traterritoriality and consular jurisdiction, she should be 
prepared to fulfill the duty of efficient and modern judi- 
cial administration. To recover concessions and settle- 


492 A FOREIGN POLICY FOR CHINA 


ments, she should be ready to assume the responsibilities 
of modern municipal administration. To regain leased 
territories, she should stand ready to preserve and pro- 
tect these strategic bases; that is to say, she must under- 
take the obligation of maintaining a strong army and 
navy. 


NOTES TO CHAPTER XXIX 


1. Hertslet’s China Treaties, Vol. 1, No. 26, pp. 128-129. 

2. The Shantung Question, submitted by China to the Paris 
Peace Conference, 1919, published by the Chinese National Wel- 
fare Society in America, March, 1920, p. 90; cf. Questions for 
Readjustment, submitted to the Paris Peace Conference, 1919, 
by the Chinese Government, p. 31. 

3. Ibid, p. 90. 

ASL bid ion Ob, 

ORME te BaD BS 

6. Ibid., p. 90. 

Ai lhidyepe Ob. 

8. Millard’s Review, Supp., July 17, 1920, Millard, China’s Case 
at the Peace Conference, p. 5; vide supra, chapter on The Most 
Favored Nation Treatment. 

9. Millard’s Review, Supp., July 17, 1920, ibid., p. 4, Millard, 
China’s Case at the Peace Conference. 

10. For a full statement of these provisions for insertion, 
see Millard’s Review, Supp., July 17, 1920, ibid., pp. 4-5. 

11. Articles 156, 157, 158, Relating to Shantung, which 
awarded the former German rights in Shantung to Japan. 

12. Supp. of American Journal of Internatl. Law, Jan. and 
Apr., 1920, Treaty of Peace with Austria, Sept. 10, 1919; The 
American Journal of International Law, Jan., 1921, Treaty of 
Peace with Hungary, June 4, 1920. 

13. The Shantung Question, op. cit., p. 90. 


XXX 
UE POLICY OF THE GOLDEN RULE 


TuE third policy for China should be the policy of the 
Golden Rule. By this we mean a policy of applying to 
the international relations of China the tested rule of 
mankind—‘Do unto others as you would have others do 
unto you,” or, to use a simpler expression, “Love thy 
neighbor as thyself.” 

It is often questioned whether the Golden Rule, ap- 
plicable to private relations, can be applied to interna- 
tional relations. It is claimed that inasmuch as nations 
are not exactly like the individual, the Golden Rule is 
not admissible or applicable in international relations. 
History, however, does not support this contention. On 
the contrary, it serves to prove the applicability of the 
Golden Rule in these relations. In 1871 Germany hu- 
miliated France. She took Alsace-Lorraine, saddled a 
crushing burden of indemnity upon her, and caused her 
to sign a treaty of humiliation in the Hall of Mirrors 
at Versailles. She did not treat France as herself, nor 
do unto France as she would have France do to her. In 
1919, as measure for measure, France recovered Alsace- 
Lorraine, and in conjunction with her Allies, caused Ger- 
many to sign a treaty of humiliation in the same Hall 
of Mirrors at Versailles, where Germany had humiliated 
France forty-eight years before.t To-day, France is 
endeavoring to impose on Germany a crushing load of 
indemnity as Germany had done in 1871. As Germany 
had dealt with France, so France deals with Germany. 

On the other hand, Lafayette came over and fought 
for the independence of the United States. He treated 
this country as his own, or did what he would have 

493 


494 A FOREIGN POLICY FOR CHINA 


this country do to France. In return, in less than a 
century and a half, when French liberty was imperiled, 
the United States came to the rescue, and when General 
Pershing landed at France, he placed at the feet of the 
statue of Lafayette a wreath bearing the laconic tribute, 
“Lafayette, we are here.” Thus, as Lafayette had dealt 
with this nation, so the American people dealt with 
France. 

Again, in the history of China, there are two nations 
whose relations with China further illustrate the appli- 
cability of the Golden Rule in international relations. 
Japan sought to extend her territorial limits in the di- 
rection of Manchuria and Mongolia, and to gain the 
political control of China. She violated, as we recall, 
the neutrality of China in her seizure of German rights 
in Shantung, and subsequently deprived China at the | 
Paris Peace Conference of the legitimate fruits of China’s 
entrance into the war. She would not wish China to 
expand territorially at her expense, nor to seek the po- 
litical control of the Tokio Government; nor would she 
wish to see China violate her neutrality or sovereignty 
or deprive her of the legitimate fruits of war; and yet 
she did all these things to China. She did not regard 
the territorial integrity and the political independence of 
China as sacred as her own. She did not respect the 
rights and welfare of China as her own. In short, she 
did not treat China as herself. As a consequence, her 
trade in China met a serious setback in the Chinese 
boycott. Her prestige and popularity, won through the 
Russo-Japanese War, are practically wiped out. She 
failed to apply the Golden Rule, and she therefore lost 
the friendship of China. 

In striking contrast with Japan is-the record of the 
United States. She sent missionaries to promote the 
welfare of the Chinese. She refrained from the struggle 
for leases and concessions, while the other Powers made 
China a happy hunting ground. On the contrary, when 


POLICY OF THE GOLDEN RULE —= 495 


China was on the brink of partition, she came with the 
Open Door Doctrine, which contributed much toward 
saving China from dismemberment. In justice and gen- 
erosity, she remitted the uncovered balance of the Boxer 
indemnity, thus affording means to Chinese youths for 
education in America. As a result, she has won the 
gratitude and good-will of the Chinese. She enjoys the 
enviable honor of being considered China’s best friend. 
Inasmuch as she has respected and exerted her efforts 
to maintain the territorial integrity and political inde- 
pendence of China, inasmuch as she has made possible 
the education of Chinese youths within her borders, who 
are bound to influence, if not control, the future destiny 
of China, she has, in these respects, truly regarded 
China as herself, or done what she would have had China 
do to her, had she been in her place. She has followed 
the Golden Rule and so she has won the friendship 
and good-will of the Chinese. 

From these historic instances, it may be seen that the 
Golden Rule applies to relations between nations as it 
does between individuals. As one nation deals with 
another, so shall she be dealt with. If she does not regard 
other nations as herself, or do what she would have 
others not do to her, she will likewise be retributed. The 
nation that follows the Golden Rule will win the friend- 
ship of other nations. She that fails to do so shall lose 
the same. 

This being so, it is but fitting and proper that China 
should adopt the policy of the Golden Rule. Through- 
out China’s diplomatic history, the Powers, on the whole, 
have failed to apply the Golden Rule, but, on the con- 
trary, have treated her with arrogance, selfishness and 
aggressiveness, While it is but natural for her to react 
with similar violations of the Golden Rule, it is, never- 
theless, the part of wisdom and righteousness to abandon 
any measure of revenge or retaliation, and to return the 
failures of foreign Powers with the application of the 


496 A FOREIGN POLICY FOR CHINA 


Golden Rule. This not only returns good for evil, but 
also prevents any further degeneration of international 
morality. Further, the Golden Rule is the fundamental 
moral law governing the relations between individuals as 
well as nations. It underlies the entire system of inter- 
national law. Hence, the pursuance of this policy will 
bring China in harmony with this fundamental moral 
law, with the consequences of peace and concord. What 
is more, the Golden Rule is the way to win friendship. 
Any individual or nation applying it will gain the friend- 
ship of the persons or nations to whom the Rule is 
applied. If China applies this rule in her international 
relations, she will win the friendship of all nations. 


In applying this Golden Rule, there are two princi- 
ples which must be distinctly observed. The first is 
that of equality. The Golden Rule presupposes the equal- 
ity of the parties concerned. Henceforth in all dealings 
China should make this principle of equality the basis 
of international relations. This principle appears all the 
more imperative when we trace the history of China in 
this respect. After the opening of China and before 
her defeat at the hands of Great Britain and France in 
1857-60, she was proud and did not regard Western Pow- 
ers as equals. After defeat, however, she was chastened 
and recognized her equality with the other states. This 
attitude prevailed throughout the period of the loss of 
dependencies, until the Chino-Japanese War, when her 
weakness was exposed through the victorious arms of 
Japan. From that time onward China dropped below 
the level of equality and occupied the position of an 
international inferior. This remained so until the 
Chinese Revolution of 1911, when she manifested to the 
world the strength of her newly awakened nationalism, 
which slightly improved her international status, but it 
was not until her entrance into the war and her admira- 
ble record at the Paris Peace Conference that her inter- 


POLICY OF THE GOLDEN RULE 497 


national position rose again to the level of equality. 
Vis-a-vis the Central Powers, the old treaties having been 
abrogated, she now stands as an equal. Likewise, with 
all the non-treaty States, she maintains a similar position 
of equality. In fact, she has persistently insisted on the 
principle of equality as being a requisite basis of any 
treaty to be entered into with the non-treaty States. To 
this effect the Presidential Mandate of April 28, 1919, 
reads: ? 


_ “Hereafter, all non-treaty countries wishing to enter 
into treaty relations with China should do so on the basis 
of equality.” 


It is only in her relations with the other treaty Powers 
having their treaties still in force that China is still under 
the servitude of the old régime. It is here also that China 
should apply the principle of equality and endeavor, as 
far as feasible, to have those old treaties revised and new 
ones concluded based on the principle of equality. 

A second principle of the Golden Rule is that of reci- 
procity. This is the essence or keynote of the Golden 
Rule. Any observance of the Golden Rule demands the 
observance of the principle of reciprocity. This is made 
all the more imperative when we realize that throughout 
China’s diplomatic history there is a significant absence 
of this principle in many important instances. The treaty 
Powers can impose any tariff they please on Chinese ex- 
ports and imports, and yet China cannot levy. any tariff 
as she pleases, but must act in accordance with the tariff 
conventions fixed by the treaty Powers. Foreign Powers 
can lease China’s strategic bases and fortify them for 
the strengthening of their positions in the Far East: yet 
China cannot acquire similar strategic points on the ter- 
ritories of these Powers. The nationals of the treaty 
Powers can enjoy extraterritorial rights in China, that 
is to say, they are clothed with the privilege of exemption 


498 A FOREIGN POLICY FOR CHINA 


from the operation of local courts; yet Chinese citizens 
cannot enjoy such privileges, but must submit to the 
jurisdiction of foreign lands where they go. Foreign 
Powers can carve out spheres of interest in China and 
claim the privilege of exclusive exploitation within their 
respective spheres; yet China cannot delimit similar 
spheres of interest and make the same claims of pri- 
ority in other lands. In short, many of the important 
arrangements in the treaties of China are wholly unilat- 
eral: they apply to China only, but not to foreign Powers 
as well. Such a situation should be remedied hereafter 
by a strict insistence upon the application of the principle 
of reciprocity. That is to say, whatever applies to China 
should be applied to the foreign Powers as well, unless 
other forms of compensation or return can be substituted. 
In other words, whatever arrangements may be entered 
into hereafter should be applied to both or all contracting 
parties, and so become bilateral or reciprocal. 

The Chinese Government seems lately to have adopted 
the principles of equality and reciprocity as the basis of 
the treaty relations that are to be entered into hereafter, 
either with non-treaty states or otherwise. In the provi- 
sions submitted by the Chinese Peace Delegation at Paris 
for insertion in the preliminaries of peace with Germany, 
it was stipulated that 


“German engages to adopt the principles of equality and 
reciprocity as the basis of a new treaty of commerce and 
general relations to be concluded with China... .’% 


Although this stipulation for insertion was not incorpo- 
rated in the Treaty of Peace with Germany, it indicates 
that in any treaty of commerce and general relations 
which China enters into with Germany or any other states 
in the future, will be based on the principles of equality 
and reciprocity. 


POLICY OF THE GOLDEN RULE 499 


NOTES TO CHAPTER XXX 


1, New York Times, June 29, 1919, p. 1; New York Times, 
June30,: 3) 1: 

2. Copy furnished by the Department of State, Washington, 
D. a and also by the Chinese Foreign Office, Peking (Chinese 
TEXE). 

3. T. F. Millard, China’s Case at the Peace Conference, Mil- 
lard’s Review, Supp., July 17, 1920, pp. 4-5. 


XXXI 
THE POLICY OF WORLD WELFARE 


Tue fourth policy for China should be the policy of 
world welfare. By this we mean that China should adopt 
a policy that will promote, and contribute to, the wel- 
fare of the world. It is not sufficient for China to pre- 
serve herself, or to recover her impaired rights, or to 
follow the Golden Rule; she should also become one of 
the leaders of the world and devote herself to the serv- 
ice and welfare of humanity. 

The first task in connection with the policy of world 
welfare is the maintenance of the peace of the Far East 
and the preservation and protection of neighboring states 
with respect to their territorial integrity and political inde- 
pendence,—Korea, Philippine Islands, Siam, Burma, 
India and the Southern Pacific Islands. With those ter- 
ritories already under the control of other Powers, we 
shall not interfere. With those territories, however, 
which are yet independent, or which are to achieve their 
independence in future, we should stand as protector and 
elder brother. Call this what you will,—the “Asiatic” 
Monroe Doctrine, or the doctrine of the Middle King- 
dom,—it is the duty of China to care for the integrity 
and security of these smaller neighbors. 

This task should be assumed by China, because these 
smaller neighbors are necessary buttresses of China’s 
safety. Any interference with their territorial integrity 
or political independence affects vitally and keenly the 
safety and welfare of China. It was the annexation of 
Korea that made possible Japan’s continental expansion, 
her fall having exposed China to the menace of Japan. 

500 


POLICY OF WORLD WELFARE 501 


Hence the independence of Korea is indispensable to the 
safety of China:as well as of Japan. Likewise, it was 
the seizure of Annam and Tonkin that exposed China’s 
southwestern frontier to the aggressive designs of France. 
Therefore, for the sake of self-preservation, if not for 
any other reason, China should assume the responsi- 
bility of the protection and preservation of these smaller 
neighbors. 

Again, this task must be undertaken by China, because 
a strong and independent China is indispensable to the 
political independence and territorial integrity of her 
smaller neighbors. Just as her own safety depends upon 
the security of these neighbors, so theirs depends upon 
the security of China. For China occupies the center of 
political gravity in the Far East, and the other surround- 
ing states need the stabilizing influence of a strong, stable, 
independent and protective China. Should she fall, it 
would undoubtedly disturb the equilibrium and probably 
entail the fall of her neighbors. Hence she owes a duty 
to these neighbors to become, and remain, strong and 
independent in order to fulfill the obligation of stabiliz- 
ing the political equilibrium of the Far East and of afford- 
ing necessary assistance and protection to her smaller 
neighbors. : 

Moreover, China is the mother of Far Eastern civili- 
zation. She developed her own indigenous civilization 
and then spread it northward to Mongolia, eastward to 
Korea and Japan and Formosa, southward to Annam, 
Tonkin, Cochin-China, Siam and Burma, and westward 
to Tibet and Sinkiang. There is, therefore, a community 
of interest or a family of States in the Far East, which 
is distinct from those in other parts of the world. In 
this Far-Eastern family, China being the mother of their 
civilization and the center of political gravity, should 
undertake the solemn obligation to preserve and protect 
the integrity and liberty of the members of this great 
family. 


502 A FOREIGN POLICY FOR CHINA 


Next to the maintenance of the “Asiatic” Monroe 
Doctrine, or the Doctrine of the Middle Kingdom, China’s 
task in respect to the policy of world welfare is to pro- 
mote world peace. The Chinese, as a race, are destined 
to fulfill the mission of promoting world peace. Rea- 
sonable, peace-loving, devoid of racial prejudice, regard- 
ing “all men within the four seas as brothers,” they are 
peculiarly fitted for the unique destiny of promoting 
world peace. And to fulfill this mission and destiny, 
she must strive to maintain the reign of justice and 
righteousness among the nations. For no peace can en- 
dure that is not founded on justice and righteousness. 
In other words, to maintain world peace, it is necessary 
first to maintain the reign of international justice and 
righteousness, which is the foundation of peace. And to 
do so, the most effective way is to maintain the sanctity 
of the principles of international law. If all nations 
would observe these principles, there would be no injus- 
tice and unrighteousness, and hence, no war. China en- 
tered the World War on the ostensible ground of main- 
taining the sanctity of international law, and this policy, 
so nobly inaugurated, should remain a cardinal prin- 
ciple of her foreign policy. To this effect China’s decla- 
ration of war on German and Austria-Hungary, August 
14, 1917, reads in part: + 


sag 
\ 


“What we have desired is peace; what we have re- 
spected is international law; what we have to protect are 
the lives and property of our own people. As we orig- 
inally had no other grave causes of enmity against Ger- 
many, if the German Government had manifested repent- 
ance for the deplorable consequences resulting from its 
method of warfare, it might have been expected to modify 
this policy in view of the common indignation of the 
whole world. That was what we have eagerly desired, 
and it was the reason why we have felt reluctant to treat 
Germany as a common enemy. Nevertheless, during the 
five months following the severance of diplomatic rela- 


POLICY OF WORLD WELFARE 503 


tions, the submarine attacks have continued exactly as 
before. It is not Germany alone, but Austria-Hungary 
as well, which has adopted and pursued this policy with- 
out abatement. Not only has international law been 
thereby violated, but also our people are suffering injuries 
and losses. The most sincere hope on our part of bring- 
ing about a better state is now shattered.” 


Apart from maintaining the sanctity of international 
law, to uphold the reign of justice and righteousness and 
thus to promote world peace, China should actively par- 
ticipate in all the activities and functions of the League 
of Nations. No matter whether the League, as it now 
stands, will work well or not, it is her duty as well 
as her privilege to share in all the obligations of the 
League, and if its present organization proves inadequate 
and defective, she should suggest amendments for its im- 
provement. With the establishment of the Permanent 
Court of International Justice, she should exemplify her 
spirit of reasonableness and fairness by submitting as 
many cases of dispute as are feasible and proper, to the 
end that nations may more and more resort to the court 
of justice rather than to the arbitrament of the sword. 
Whenever and wherever the sanctions of the League 
should be employed to compel the obedience of the re- 
calcitrant, China should, as far as possible and appro- 
priate, share therein.? 


In addition to the promotion of world peace, she should 
strive to contribute to the world civilization. As she is 
so richly endowed with natural resources, she should de- 
velop and use them for satisfying the needs, not only 
of her own people, but also of other peoples through com- 
merce and exchange. As she is credited with the inven- 
tion of printing, the compass, gunpowder, etc., so, when 
she has mastered the Western sciences, she should make 
other discoveries and inventions, and thus contribute to 


504 A FOREIGN POLICY FOR CHINA 


the progress, comfort and happiness of mankind. As 
she has developed and trained the intellect of her people 
through competitive examinations for civil service, so 
should she apply Chinese scholarship to the study of mod- 
ern sciences and arts, to the end that she may not be 
merely a nation receiving learning from others, but also 
one radiating light and truth. Inasmuch as her people, 
as a race, are noted for the excellence of their domestic 
virtues, such as filial piety, respect for age, courtesy, 
moral earnestness, etc., she should spread the influence of 
these virtues as far as they are needed. 


Finally, in pursuing this policy of world welfare China 
should not entertain a spirit of world domination, but 
should humble herself and take the lowly path of serv- 
ice. She should not commit the same error that Germany 
did in attempting to seek world domination, which only 
plunged Germany into the depths of humiliation. She 
should rather aim to impart as much benefit to the world 
as possible in the way of service. For the day will come 
when it is not the nation that dominates others that shall 
be great, but the nation that can render to mankind the 
greatest service. 


: NOTES TO CHAPTER XXXI 

1. The Shantung Question, submitted by China to the Paris 
Peace Conference, 1919, published by the Chinese National Wel- 
fare Society in America, March, 1920, China’s Declaration of 
War against the Central Powers, pp. 64-65. 

2. Having now been honored with a seat at the Supreme 
Council, China should demonstrate her spirit of conciliation and 
exercise her talent of peace-making.—Regarding China’s election 
to the Supreme Council of the League, see New York Times, 
Dec. 16, 1920, I: 2. 


XXXII 
A POLICY TOWARD JAPAN IN PARTICULAR 


WE have so far outlined the principles of China’s for- 
eign policy toward the Powers in general,—preservation, 
recovery, the Golden Rule, and world welfare. As Japan 
occupies a special position in the foreign relations of 
China, we shall now endeavor to formulate a policy 
applicable to Japan. 

To begin with, all of the foregoing principles are 
applicable to Japan. With respect to preservation, China 
should resist any territorial aggression or political de- 
signs of Japan. With reference to recovery, China should 
regain all the rights of sovereignty now being held by 
Japan. As regards the Golden Rule, China should treat 
Japan as herself, or do unto her neighbor as she would 
have Japan do to her. Relating to world welfare, China 
should maintain a strong and stable government so that 
Japan may find collateral protection therefrom, and 
should cooperate with Japan in maintaining an Asiatic 
Monroe Doctrine, or the Doctrine of the Middle Kingdom. 

But the application of these four principles is not suffi- 
cient. Inasmuch as Japan maintains five policies, China 
should be prepared to meet them one by one. With re- 
spect to Japan’s policy of economic exploitation, China 
should cooperate with her in so far as her needs are real. 
The solution of Japan’s problem of population lying in 
industrialization and commercial expansion, China should 
attempt to facilitate this transformation of Japan as far 
as possible. As Japan’s need of raw materials, coking 
coal, iron and steel, is genuine, and especially as China 
herself is bountifully endowed therewith, she should 
be generous and sympathetic and supply Japan with what 

505 


506 A FOREIGN POLICY FOR CHINA 


she truly needs. At the same time, however, China 
should not permit Japan to monopolize her iron mines 
or any important industry. She should not permit Japan 
to carry on economic exploitation in China for the sole 
benefit of herself and to the exclusion or injury of China 
and other Powers. 

With regard to Japan’s policy of territorial extension 
in the direction of Manchuria and Mongolia, China can- 
not but resist it. For the conquest and annexation of 
Manchuria and Mongolia will inevitably lead Japan to 
attempt China’s subjugation. Manchuria and Mongolia 
are the historic roads of invasion into China. Any nation 
controlling or possessing these two regions has in her 
hand the key to the conquest of China. Hence the pres- 
ervation of Manchuria and Mongolia must be secured at 
any cost. Yet, inasmuch as Japan has rendered a service, 
as a by-product of the Russo-Japanese War, in preserv- 
ing Manchuria from the grasp of Russia, she should be 
permitted to retain whatever economic privileges she now 
holds in Manchuria and to carry on any economic activi- 
ties therein that are not inconsistent with the sovereignty 
of China and welfare of the Chinese. Further, her people 
should be permitted to settle in Manchuria, provided 
they do so under Chinese jurisdiction, which, of course, 
means that China should not close the door of Man- 
churia to Japanese immigration. 

With reference to Japan’s policy of paramount influ- 
ence, it is not necessary for China to resist it. Still, 
it is essential that China should hold Japan to the rules 
of fair play. She should require Japan to observe the 
principle of equal opportunity of trade, to respect China’s 
sovereignty, and to fulfill the special duties inherent in 
the special rights, if any, as claimed by Japan. The ob- 
servance by Japan of these principles of fair-play will 
obviate any danger arising from this policy. Incidentally, 
as a matter of reciprocity, China can claim similar special 
interests or rights in Japan, and establish corresponding 


A POLICY TOWARD JAPAN 507 


positions of paramount influence, provided she observes 
the same rules. 

As regards Japan’s policy of political control, there is 
no alternative, consistent with honor, open to China than 
to resist such a policy. Not only has Japan’s record in 
Korea been such as to send terror and warning into the 
heart of every Chinese, but the success of Japan in carry- 
ing out this policy will mean the passing of Chinese inde- 
pendence, which ought never to be tolerated. On the 
other hand, however, it is essential that China should 
remove the primary cause of this policy of Japan, that 
is, the inefficiency and, to some extent, the corruption 
of the Chinese Government and the seemingly impending 
peril of the international control of China’s finance, by 
the inauguration of a strong and efficient government, free 
and immune from any foreign control. 

As to Japan’s policy of an Asiatic Monroe Doctrine, 
it is essential for China to maintain an attitude of judi- 
cious discernment. As it stands, the doctrine may be 
regarded as hollow and ineffective. It is, therefore, un- 
necessary for China to be concerned about it. If, how- 
ever, Japan means to establish a genuine Asiatic Monroe 
Doctrine, the same as that maintained by the United 
States for the Western Hemisphere, it is but fitting and 
proper that China should extend her cooperation and 
jointly institute the doctrine of Pan-Asiaism in the Orient 
—especially in view of the fact that China herself should 
maintain such a doctrine in the Far Fast. 

Besides meeting these five policies of Japan, China 
should adopt a fundamental attitude of reconciliation and 
friendliness. China and Japan are so closely interwoven 
in interest and destiny that China cannot injure Japan 
without injuring herself, and vice versa, and that China 
cannot have an unfriendly and antagonistic Japan at her 
side without weakening her own position in the world, 
and vice versa. Further, in her attempt to solve her own 
population problem and the Chinese Question, Japan was 


508 ‘A FOREIGN POLICY FOR CHINA 


wrong in ways, but not necessarily wrong in ends or 
motives. She desires to preserve, and not to destroy, 
China. Moreover, should she change her policy, .she 
would possess the possibility of becoming a potential 
friend, if not the best friend, of China. With the aban- 
donment of the policy of territorial expansion and po- 
litical control, and with a firm determination to bend her 
efforts toward commercial expansion and the maintenance 
of a true Asiatic Monroe Doctrine, she would be a most 
valuable friend of China. For while no other nation 
would fight merely for the welfare and existence of China, 
Japan’s safety and destiny being so inseparably related 
to China’s, she is ready to make common cause with 
China in any struggle for the preservation of race and 
for the maintenance of justice and righteousness. Hence 
it is but a part of statesmanship, as well as of right and 
justice, that China should entertain a conciliatory and 
friendly attitude toward Japan, and that, as soon as the 
present differences should have been amicably settled, 
China should enter into a genuine relation of cordial 
friendship with Japan. 


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